Is the Costco American Express TrueEarnings Card Worth Adding to Your Wallet?

Costco is well-known for being a place to find good deals.  Whether you’re looking to stock up on bulk items, replace the tires on your car, or print out your Christmas cards…you will find a bargain at Costco.

Now the popular wholesale warehouse has teamed up with American Express to offer a cash back credit card that lets you earn rewards both inside the store and out.  The TrueEarnings® Card from Costco and American Express offers all the convenience of an American Express card along with some neat benefits and rewards.

Costco American Express Card – Key Features

• Earn Cash Back with Every Purchase.  You’ll earn 3% cash back on gasoline purchases up to $3,000 each year (1% thereafter), 2% at restaurants, 2% on travel expenses, and 1% everywhere else
• 0% intro APR for 6 months
• Earn unlimited cash back.  You can even add additional cardholders to your account and earn cash back on their purchases too
• Two memberships in one.  It’s an American Express card and a Costco card all in one, with no annual fee for Costco members
• Car rental loss and damage insurance at no additional charge
• Traveling out of country?  Have foreign currency or travelers checks shipped right to your door
• Up to $100,000 in Travel Insurance for you and your family
• Extended warranty coverage protects your purchases up to one additional year after the manufacturer warranty expires
•  24/7 customer service hotline to assist you no matter where in the world you are
• Earned 4.5 out of 5 stars with over 15,000 customer reviews and counting

Now there are a couple of quirks that we feel should be mentioned.  First, although you earn the rewards all year long you can only access them once a year.  Once a year you receive a cash reward coupon that you can redeem at any Costco warehouse location for merchandise or cash.  While an annual windfall is nice, we would prefer to receive rewards more frequently.

The other weird thing is that there are no special discounts for shopping at Costco other than the 1% cash back reward.  It would be nice to receive special sale prices or rewards in store, but given their already discounted prices and thin profit margin that could be too much to ask.  But the fact that rewards can be earned anywhere (the 3% cash back on gas is a big plus!) mean this is a competitive product in the crowded market for cash back credit cards.

Click here now to learn more and sign up for the TrueEarnings® Card from Costco and American Express

In a recent post I explained how compound interest is like a superhero that can take even a modest investment and turn it into a serious sum of money.  The power of compound interest should never be underestimated and you should take advantage of it whenever you can.

But that’s not exactly the whole story.  You see, there is another side to compound interest.  A dark side.

As long as you stay on compound interest’s good side, it will look after you and help you build wealth and increase your net worth.  But if you fall prey to the dark side of compounding interest you’ll find yourself trapped in a downward spiral of rising interest rates and minimum balances.

You see, just as compound interest can help your savings and investments grow exponentially…it can do the same thing for your debt.  Those innocent credit card purchases become a heavy burden and when you add the total interest payments you make to the original price of the item you will be shocked at what it truly cost.

You can see what I mean by using the Federal Reserve’s Credit Card Repayment Calculator.  Let’s say you go out and spend $3,000 on new furniture and you charge it on your credit card at an interest rate of 17%.  Plug those numbers into the repayment calculator and this is what you get…

As you can see, it would take you 23 years to pay off that original $3,000 purchase and you’d pay an absurd $5,609 in interest charges.  That means you paid $8,609 for only $3,000 worth of furniture.

And if you continue to charge more purchases your balance and total interest paid will skyrocket.  That’s why carrying a credit card balance is a no-win situation that should be avoided if you want to keep control of your finances.  Because once you get compound interest working against you, it’s like pailing water off the Titanic.

Nothing beats the convenience of using credit cards, either for major purchases or day-to-day shopping needs. Statistics suggest that over 50% of the adult population has at least one card.  MSN Money reports that one in seven Americans carries ten different credit cards, which sounds incredible, but in reality is easy to do because they offer so many advantages.

If you use credit cards, now is the perfect time to take a look at how you can get more from your cards, such as rewards, cash back and 0% or low rate balance transfers at moneysupermarket.

Making your card pay you perhaps sounds too good to be true it is possible. Credit card companies are highly competitive and want to retain loyal customers and attract new clients.

One method they employ is to offer the customer more than just the usual credit card facilities, so customers can enjoy a range of benefits and rewards from using their cards. Depending on the credit card company, these can include cash back on purchases, money-off vouchers, discounts and lower interest annual percentage rates (known as APRs).

So how do you pick the right card for you? With hundreds available to select from, the choice can be overwhelming. First of all, consider what would be most beneficial financially.

Do you have an outstanding amount on a credit card for which you are paying a high rate of interest? If so, look for a card that offers a 0% balance transfer rate and low APR. This 0% or low rate of interest will mean you pay less money back than if you stayed with a card on a higher rate. Even on small sums, the difference between 5% APR and 15% APR can be considerable.

Secondly, think about how you use your card. Are you likely to use it mostly to pay for weekly groceries? If so, consider applying for a card from one of the big retailers.  If you use the Wal-Mart Discover credit card, for example, you can benefit from up to 1% cash back on all purchases. Consider the cost of your weekly shop multiplied for over a year and you can see how the cash back would be very welcome!

Wal-Mart, like many companies, provides you with the security of $0 fraud liability. We have all heard horror stories of how a stolen credit card was used to run up major bills, so this can be very reassuring.

If you tend to worry about using credit cards online or that criminals may clone your card, prioritize a company that offers additional security benefits, such as fraud protection guarantees.

We all know that the cost of fuel is a major expense for most families and if you travel for work or leisure the costs can become significant. Choose a card from one of the fuel suppliers to benefit from a discount on fuel prices plus reward points that can be saved and redeemed in the future. Many motoring organizations will offer their own credit cards that include free or reduced-price membership and break-down cover with priority status. If you drive extensively for work purposes this could be a good choice for you.

This is a guest post from the folks at MoneySuperMarket.com

Pete D’Arruda caused a storm recently when he told of his experiences managing 25 charge cards, totalling over $250,000 of available credit and reaping in the rewards while he did it. But is his approach inspirational – or dangerous?

D’Arruda admitted to having around 25 Mastercard, Visa and Amex cards, alongside individual gas, store and airline cards, with an average credit availability of $12k a card.

A personal finance consultant, he began his effort to build his credit rating and reap the advantages and rewards available. Also an author of three personal finance books, his theory was to test the ‘more is better’ approach of credit card ownership.

His hypothesis was that the more available credit and cards that one person had, the better their credit score, assuming, of course, that they paid their bills on time.

D’Arruda’s credit score is in the high 810 plus range, so he’s clearly working the system well. However, credit experts have warned that his approach is at best unecessary and at worst, setting a dangerous example to others.

D’Arruda agrees that his approach has only worked because of his exceptional organisational skills. He charges everything to his credit cards, but pays everything promptly, with very few outstanding balances.

He explains too that by putting every charge through on the ‘best’ card, he’s accrued thousands of airmiles, discounts, points and freebies for retailers, vacations, flights and more, effectively being paid to manage his credit well.

His advice for anyone wishing to follow in his footsteps falls into three categories. Firstly, paying bills on time, or even twice a month in two sections, so balances are kept in order.

Secondly, utilization rate is key – it’s basically your debt to available credit ratio and it should be no more than 30%, or creditors get twitchy. The best rate is around 10%.

Finally, keep an eye on your credit mix – handle all your credit and loans with the same rigour. That goes for mortgages, student loans, personal debts and other types of credit.

For the rest of us then, the question remains. Is it sensible to use credit cards in such a way, to your advantage? Or is it the quick way to financial ruin.

The important part of that phrase is of course the ‘to your advantage’, as most of us quite simply don’t have the willpower or incredible organization required to match Mr D’Arruda’s feat. For those without iron wills and exceptional discipline, a single low rate balance transfer card may be a better solution.

Go to moneysupermarket.com to see the latest range of best buys and then look to transfer over expensive outstanding credit and charge card balances.

Zero percent APR cards may be available, or, if you’re unlikely to clear the balance within the promotional period, a low ‘life of balance’ card may be the better option.

Ultimately credit should be respected and for anyone with a less than perfect history, the focus should be on managing existing debts, along with getting financial discipline in place.

In conclusion, leave high risk approaches to those with the time, energy and know-how to manage them. For now, focus on the fundamentals: a good budget, a plan and spending less than you earn.

Are You Misusing Your Credit Card?

Federal Reserve figures show that total amount of revolving debt in the United States currently stands at over $850 billion and around 98 per cent of this is credit card debt.

And although credit card debt is currently at its lowest level for seven years, it appears that this is due to lenders writing off debt rather than borrowers paying it off.

So, of the estimated 150 million credit card holders that currently live in the US, how many of these actually know how to use their credit card correctly?

This may be hard to quantify as everyone has different needs and ways of using their card but if you feel that you may not be getting the most out of your credit card then read on to find out how best to use your plastic.

The first thing to consider is that you must be responsible with your card.

This means that you mustn’t overspend on your card as spending more than you can afford to pay back at the end of the month means that you are likely to incur interest fees that will increase the level of debt that you are in.

In addition, make sure that you never spend more than your agreed credit limit as you will be charged a penalty fee that will also add to your debt.

You then need to consider the ways in which you use your card and it is vital that you do not use it as an emergency fund. If you are caught short for cash one of the easiest things to do is take out your credit card and worry how you’ll meet the payment at a later date. But doing this can throw any budget plan way off course and should be avoided at all costs.

Furthermore, you should try to avoid credit card cash advances wherever possible as they start to accrue interest immediately and, in many cases, this will be at a higher rate of interest than the rate the card gives you on purchase and balance transfers. In addition, you will most likely be charged for drawing money on the credit card which could be a flat rate or a percentage of the amount you have withdrawn.

Once you know how to use your credit card correctly and responsibly, it’s time to start making the card work for you!

Many people are of the opinion that you shouldn’t use your credit card for everyday purchases, which is sound advice if you are not going to keep track of your daily outgoings as the debt will soon add up.

If done correctly though, using your card for everyday items such a fuel and grocery shopping means that you can keep your money in your bank account for longer and take advantage of the banks paying you interest on this.

The best way to ensure that you do this successfully is to keep a record of everything you spend, keeping receipts is the simplest way to do this, and make sure that you pay off the balance in full at the end of each month.

There is no point in doing this if you feel that you don’t have the discipline to stick to it as credit card interest rates are way above anything that the banks are likely to give you in interest on the money in your account.

Using your credit card regularly also helps to build your credit history and improve your credit rating which, in turn, will get you better deals in the future which could lead to lower rates of interest and interest-free periods that can last up to 18 months.

In addition, if you compare credit cards on websites such as Moneysupermarket then you will find that some credit cards will offer cash back, air miles or reward points that can be used to redeem luxury items. So by using your card regularly you can quickly benefit from these reward schemes.

The most important piece of advice though is that you must pay off your balance in full at the end of each month.

It is also worth considering that, if you have tried and failed with credit cards in the past, then they may simply not be for you and it may be wise to steer clear of them altogether.  Furthermore, it might also be a good idea to seek credit repair services to help mitigate the damage done.

On the other hand, if you feel that you can adhere to the tips outlined above then credit cards can be a great way to make your money go further.

Credit cards can be a great personal finance tool, but to make the most of your plastic it’s imperative that you choose the right card for your circumstances.

So before applying for a new credit card you should make sure you’re clear exactly why you’re applying. If you are consolidating debt then a balance transfer card may be best for you, if you have a low credit score then a card designed for credit building could be what you need.

Below are some of the different credit cards currently available so you can see which one best fits your needs.

Balance Transfer

Balance Transfer credit cards allow you to move existing credit card debt over to a card provided by another lender and sometimes offer an interest free period as an incentive to switch providers.

This type of card could be beneficial to anyone with outstanding balances on several credit cards as the debt can be consolidated onto the one card, making it easier to keep track of your monthly repayments and how much you owe.

Another advantage is that you will pay less interest on your borrowings, at least for a certain period of time. This means that more of your monthly repayments will go to paying off the actual debt and not to the credit card companies I interest payments.

On the downside, many lenders now charge a  transfer fee, which can be anything up to five per cent of the balance that you are transferring, so this needs to be taken into account when considering whether a balance transfer card is the right option for you.

Low Standard Rate

Low standard rate cards are sometimes a good alternative to balance transfer credit cards, particularly if you feel that you will not be able to clear the debt by time the interest free period ends. If this is the case then you may find that once the introductory period is over and the standard interest rate kicks in then the balance transfer may actually have been counter-productive.

If you take out a low standard rate credit card then you will not be hit with a sudden increase in interest rates as the low interest rate will often remain constant, at least for the life of the balance.

Although you will still be paying interest on your debt, the annual percentage rate (APR) is usually well below that of a standard credit card and so this option should still save you money and, hopefully, ensure that the debt is paid off sooner.

Purchases

Credit cards are a great way to spread the cost of a purchase over a period of time. This is particularly useful if you need to make an expensive purchase that you will not be able to pay off in one go as you can effectively ‘buy now and pay later’.

This sort of transaction needs to be done with a degree of caution as paying for expensive items on a credit card can lead to excessive interest charges and can lead to spiraling debt if not managed correctly.

But if you are in a position whereby you can effectively spread the cost of a large purchase over a period of time without racking up huge amounts of debt in interest payments then a credit card can give you the freedom to do this.

Furthermore, if you have a good credit history then you may be eligible for a card that offers zero per cent interest on purchases for a set amount of time and so you may even be able to spread the cost without paying a penny in interest.

Credit Build and Credit Repair

Credit cards can also be useful if you are looking to rebuild a damaged credit rating or build up a credit score if you have no previous credit history.

And there are specialized credit repair and credit builder credit cards that you may be able to take out even if you have had credit problems in the past.

You can build your credit score with these cards as long as you keep up with the monthly repayments as this will show lenders that you are a responsible customer.

The major downside to these cards is that they often have a very high  APR, often in excess of 30 per cent, so it is advisable that you don’t carry a balance over from one month to the next. In addition, credit limits are often set low on these cards so you may not be able to use a credit builder card for a major purchase.

Rewards

Some lenders offer rewards to customers as an incentive to use their particular card and these can range from money off at supermarkets, air miles or even cash back.

So if you pay for your weekly grocery shop on a card that offers money off at supermarkets then you could make a saving on your shopping just for using your card. Similarly, some cards offer cash back at the end of each month so you can earn money back just by using your card.

But these cards are really only worth considering if you are confident that you will be able to pay off the balance in full at the end of each month as the interest that you will be charged on any outstanding balances will often outweigh the value of the rewards on offer.

There are credit cards on the market to meet the requirements of a variety of consumers so it is best to shop around to find the best credit card that meets your specific requirements.

And remember, you should always try to pay a credit card balance off in full at the end of each month to avoid paying interest and increasing the level of debt.

Article written by Les Roberts, credit card researcher at Moneysupermarket.com.

Tim Chen is founder and CEO of NerdWallet.com, a website that helps consumers to compare credit card offers.  Tim also educates consumers about credit cards and debt management at the Forbes MoneybuilderBlog, the Huffington Post, and the Christian Science Monitor.

Remember the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) that was supposed to keep the average American from being taken hostage by credit card companies? The good news is that much of it has done just that.But before consumers claim victory, there are some dirty little secrets you should know.

The average American household has unpaid credit card debt of nearly $5,000and most are looking for the cheapest way to manage that debt until they can pay it off. If you’re like many, you’ve probably considered transferring your balance to a low rate card – but is it really a good idea?

Balance Transfer Shenanigans Before The CARD Act

Let’s set up a hypothetical situation. You are one of those households with $5,000 in credit card debt and last year you receiveda credit card offer from First Friendly Bank that has“0% interest balance transfer” written in big blue letters on the front of the envelope.  You, being the responsible consumer you are, read the fine print and noticed that the regular interest rate is 15%.

You went ahead and made the transfer and felt good about your choice, because you were certain you’d have that $5,000 paid off long before that 15% ever set in. Then, since you still had some room on the card,you used it to pay $1,000 worth of bills that had been piling up.

In a hurry to get rid of your debt, you sent$500 as your first payment and the bank applied it to your “balance,” but what wasn’t clear on your statement is that your balance transfer and your other bills are considered different balances and incur different interest rates.So howwould the bank split your $500 between each balance?

Well if you think of each of these two balances as separate buckets, the bank would apply your $500 to the balance transfer bucket. In this pre-CARD Act world, the other bucket wouldn’t see any payments until the balance transfer bucket is empty.  This means that you would be charged 15% on that $1,000 every daythat your $5,000 wasn’t paid off. If it took you a year to pay your $5,000, your $1,000 bucket would see more than $160 of interest added to it during that year, and that would continue to compound into significantly higher numbers if it took you more than a year.

So Balance Transfers Are Safer After the CARD Act, Right?

The credit card legislation signed in to law by President Obama in 2009 forced banks to change the behavior described above.  Credit card companies now must apply your payment to the bucket with the highest interest rate first, regardless of how many buckets you have and how big the balances are in each bucket. But nothing’s ever 100% safe – there’s still a catch found in the fine print: Only payments above the minimum payment amount have to be applied to the highest interest rate bucket.  They still have the freedom to apply minimum payments to any balances they wish.

So if you’re one of those who can only afford the minimum payment on your credit cards, all of it is going to the balance transfer bucket, so you’ll continue to pay off your 0% or low interest rate cardbalances, while your purchases accrue at much higher rates. This is just another reason why you should do whatever you can to pay more than the minimum each month.

Other tactics to watch out for

In addition to the interest rates that banks charge and the payment methods they employ for balance transfers, banks also generally charge upfront fees on the transferred balance.  A year ago, these fees only went as high as 3%, so you would be charged $150 out of the gates on that $5,000 transfer.  Nowadays, balance transfer fees are as high as 5%, or $250 on your hypothetical transfer.

The other balance transfer gotcha that banks have been employing in the post-CARD Act era is luring people into “professional” credit card deals.  Professional is just an ambiguous synonym for business credit cards, which are not covered by the protections in the new law.  So if you use one of these professional credit cards to transfer balances or to take advantage of introductory purchase APR deals, the issuer still has the freedom to apply your payments to low-rate balances and charge you maximum interest.

As a takeaway, credit cards can be a valuable tool for money management if used responsibly and with an eye on the fine print.But they only truly work in your favor if you know how to mitigate the fees facing you at every turn, and if you can pay the card in full each month. Interest charges and unnecessary fees will lead you down a black hole and should be avoided at all costs.

Today we have a guest post from Anthony of AccountNow. Money 411 is a personal finance blog provided free from AccountNow prepaid visa card. To read more, visit AccountNow at www.accountnow.com.

Due to the recent economic downturn, many consumers have unfortunately found themselves in situations that have caused them to earn a low credit score and resorting to things such as payday loans.   Additionally, because so many consumers have found themselves with debts that they are unable to pay, many lenders are refusing to give credit cards or other loans to those with a limited credit history. Fortunately, it is possible to build credit and improve a poor financial situation through the use of a prepaid visa card.

A prepaid visa card helps to build credit in a few different ways. One way that it helps a consumer’s credit score is by keeping an open account that is in good standing, which will be taken into consideration when evaluating credit. The major credit bureaus take into account the number of revolving debts and open accounts, as well as the number of those accounts that are in good standing, when evaluating a person’s credit. Simply keeping a prepaid credit card account open will help to slowly raise a consumer’s credit score.

Card holders will continue to earn a higher credit score the longer that they pay all necessary fees and balances that they owe. It is also advisable to constantly keep money on the card and not immediately spend the card’s balance. This shows the credit bureaus that a consumer is practicing financial responsibility and trying to improve their credit. However, it is important that a card holder does not fail to pay a monthly or additional fee, as this will lower their credit score. Consumers that continue to use their card responsibly will not only be able to improve their credit score, but may be able to qualify for a regular credit card and build a stronger credit history.

Today’s article comes from Mr Credit Card of www.askmrcreditcard.com and he is going to talk about how to spot a credit card scam. If you are looking for a credit card, I suggest you check out his best credit cards offers section.

Credit card scams are almost as old as credit cards themselves. The good news about credit cards is that the card holder is not responsible for most instances of fraud. You are protected from paying for any unauthorized charges and your only responsibility is to notify your bank in a timely manner. The burden of proof always lies on the merchant to document that you have in fact authorized the charge or charges.

The bad news is that there are plenty of ways that scammers can still try to sneak charges past unsuspecting cardholders. The classic case is when a fraudulent charge is brazenly attempted in the hope that someone will not take the time and effort to read every line on their bill, notice the charge, and call their bank to dispute it. The odds are in fact pretty good that a small but significant percentage of cardholders will not notice a charge, especially a small one. Sadly, many people will just pay their credit card bill on the assumption that all charges are legitimate.

How does a scammer get your credit card number?

The easiest way to obtain credit card numbers is to hack a database of a merchant. By obtaining numbers in bulk, criminals can make a lot of money by charging small amounts to thousands of accounts. Other ways to fraudulently obtain account information are through the lifting of information off of a card at a restaurant or hotel where the card may be processed out of your sight. Finally, credit cards are still stolen via good old fashion pickpocketing and break-ins.

A close cousin to fraudulent charges is the pre-acquired account scam. The idea is that instead of stealing your account information, a scammer can merely purchase it from a company that you legitimately did business with. On the internet, this may take the form of a pop up box that is offering you something that is seemingly free. In return, the fine print specifies that you are authorizing a third party to charge your card perpetually. Many otherwise reputable companies willingly participate in this scam.

Offline the scam takes the form of a mail solicitation, again offering you some sort of free service or perhaps even a check. The check is covered with fine print that indicates that cashing it will enroll you in some sort of travel or shopping service. The service is of questionable value at best, and your credit card will be charged every single month. Typically, the check will bear the name and logo of the otherwise reputable company that you originally gave your credit card to. The idea is to make you think that the offer is legitimate and is somehow backed by the known company. The fine print indicates that they are merely using the account information that the other company obtained, and that the scammer is really a separate entity. Sadly, these scams remain legal, while some credit card processors have vowed to crack down on them. Furthermore, such practices are against credit card merchant agreements, but the credit card processors often don’t care.

How Do You Avoid Being Scammed?

The easiest way is to avoid being a victim of a credit card scam is to review every line of your credit card statement every month. This is not as easy as it sounds. Many people rely on their credit cards for day to day purchases, and their credit card bill can contain hundreds of transactions a month. Worse, even legitimately authorized transactions sometimes look suspicious because the name on the statement may not be recognizable. Nevertheless, you still need to sacrifice several minutes of your time every month to scrutinize your credit card bill. This should be seen as a necessary activity that is part of the use of a credit card.

There are also a couple of credit card issuers that allow you to generate a one-time credit card number when you make a purchase online. That way, it adds an extra level of security. Issuers or credit cards that have this feature include Discover Card and Citicards.

Credit cards are an incredibly convenient financial tool and their security far exceeds the risks associated with using cash, checks, or even debit cards. They are incredibly secure, but they are not perfect.  Almost by definition, people who have lost money from credit card scams are not aware of it. The key to avoiding scams will always be the proper detection of fraudulent charges, and your timely notification of your bank.

If you do it right, transferring a high rate credit card balance to a lower interest rate credit card can help you save money in finance charges and reduce your debt much faster.

Some people treat balance transfers like a shell game. They keep their money flowing from one low (or sometimes zero) interest rate card to another to avoid paying hefty finance charges. This strategy can work well if you are careful.  But there are some pitfalls you will have to learn to avoid.

Verify that there are no fees for transferring your balance.  Balance transfer fees are usually waived when you are first opening a new account. Once you are a customer they will charge you a percentage of the balance transfer as a fee.  This will cut into the amount you are saving by transferring the balance.
So hurry up and transfer all of your higher balances when you first open the account. Don’t wait until later.

Don’t use the card for purchases or cash advances.  The whole idea is to take advantage of the lower rate so you can pay it off faster.  Adding more charges to it will just dig you deeper into the hole.

Be careful if you plan to continuously switch from one low-rate card to the next. Some people consider this a smart way to ‘work the system.’  But it may cost you in the end. Part of your credit score is based on the number of times you have requested credit and the number of accounts you have had open. When you later go to apply for a mortgage or auto loan you may find that all of those credit card flips have hurt your score and you no longer qualify for the best interest rates.  If that happens, you’ll be paying more in interest charges every month.