Bank of America’s credit cards: an insider’s view

Last week, I featured Bank of America’s BankAmericard Cash Rewards credit card, compiling most relevant information that is more or less public, meaning that you can obtain the information without actually having the card. As an actual cardholder, I have the advantage of knowing exactly what’s inside Bank of America’s online banking system, what other benefits a BofA card offers, as well as the details of the card’s features.

Continue reading Bank of America’s credit cards: an insider’s view

Why credit cards are the best method of payment, and debit cards are the second best

I am still amazed by the drastic change in the content of my wallet when I first hit mainland American soil in 2007. All of a sudden, the majority of the paper bills seemed to evaporate. And this was not a big deal either – I found myself not touching the remaining few for weeks at times. I have a habit of ordering my paper bills in the order of cleanness so I always get rid of the dirty ones first. My paper bills remained fresh for a long time. But this doesn’t mean I became poorer – the whole stack of paper was replaced by my only debit card at the time. I would have carried a credit card if I had owned one.

NUS000000072_160X101_STRAIGHT    vs. stack-of-money

To illustrate the benefits of payment cards, let me tell you two real-life stories. Continue reading Why credit cards are the best method of payment, and debit cards are the second best

Credit card rewards: when miles, points, and cashback are not created equal

As I have explained in previous posts, credit cards have a large variety of benefits over debit cards and other methods of payments, such as credit profile building, warranty extension, delayed payment, and emergency fund. Apart from APR’s, credit cards are more or less the same with respect to most benefits.  And of course, you should never carry a balance because a low credit card APR is still a ridiculously high interest rate. How, then, do you decide what credit cards to obtain?

Credit cards

Well, how about rewards, the most prominent feature of credit cards that are advertised these days on TV and newspapers, as well as brick-and-mortar banking locations? 1% cash back on every purchase. 5 points per dollar spent on honey. 2 miles per dollar spent on US Airways flights. I’m sure you’re familiar with these commercials already. What’s confusing about these reward systems is that they use different types of currencies which are sometimes hard to evaluate. I will attempt to decipher the most common credit card currency types for you below.  Continue reading Credit card rewards: when miles, points, and cashback are not created equal

Chase, finally!

The first time I spent an extended stay in New York, I was amazed by a lot of things. In the mind of a recent college graduate with a bachelors’ degree in economics, New York was a finance kingdom, a prosperous land for financial institutions. This impression was enhanced by the presence of millions of banks and offices in tiny, packed Manhattan. It didn’t take long for me to realize though, that there is one bank that seems to have offices and ATM’s on every street corner? When I hang out with friends in New York and come out of a bar non-sober and see everything as patches of color like an impressionist painting, the most prominent color I observe is blue. It is the same kind of blue on emergency posts that I was used to at Colgate. It is the blue of Chase.

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Continue reading Chase, finally!

The credit card APR: why this number is misleading

I have two principles in credit card management, one “hard” and one “soft.”  The hard principle, never to be violated under any circumstances, is:

“Never miss a payment”

Failing to follow the hard principle would damage my credit profile to an unimaginable extent and therefore is not allowed to happen.

The soft principle goes:

“Avoid carrying a balance except under special circumstances”

The soft principle, serves the purpose of avoiding wasting money on interest payments. From time to time there will be a credit card promotion with an introductory 0% period offer, and in such a situation carrying a balance until the end of the promotional period doesn’t do any harm unless your balance is so high that it implies bankruptcy risk.

Anyhoo, you should never have to pay credit card interest, for the simple reason that it is too expensive. The lowest credit card annual interest rate, or APR (Annual Percentage Rate), that I have seen, is 9.99%. The highest I’ve seen? Around 30%. And worse yet, these rates do not reflect the actual interest you get charged. This blog post explains why, by showing you the math used to compute the APR.

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Credit cards for credit builders: what are your options? – Part 4

If you have filled out an application for a credit card, you’d you know that one of the mandatory fields is ‘annual income’. Other than your credit profile, this is the single most important factor that creditors use to determine your eligibility for credit. But what if you’re going to school and not making any money? You still have money from your bank accounts or from family, but you don’t have a regular income. No worries: financial institutions will take care of that for you. Many creditors offer a student version of their cards, which is just about as good as the regular version.  Continue reading Credit cards for credit builders: what are your options? – Part 4

Credit cards for credit builders: what are your options? – Part 3

Option 3 for credit builders: secured credit cards

I have previously described my personal experience with Bank of America’s Bankamericard Cash Rewards secured credit card. A secured credit card is a risk-free way for financial institutions to extend you credit: the money you deposit is also your credit limit. In other words, you spend your own money; the bank doesn’t lend you anything. Yet you still have the opportunity to build up your credit profile by making on-time payments which would be reported to the Consumer Reporting Agencies (CRA’s). Continue reading Credit cards for credit builders: what are your options? – Part 3

Credit cards for credit builders: what are your options? – Part 2

In my last post: Credit cards for credit builders: what are your options? – Part 1, I talked about the option of being added as an authorized user to someone else’s credit card. Unfortunately for international students like me, this option rarely exists. The next best option is to try to obtain a credit card through your bank.  Continue reading Credit cards for credit builders: what are your options? – Part 2

Credit cards for credit builders: what are your options? –Part 1

When I opened this blog, I had in mind the picture of myself back in January 2012, half a year out of college, and having no credit. Today, it is about a year from that, and many from the next generation of college graduates are probably having the same credit situation as I was. I was lucky to be well-guided by knowledgeable friends, and I thought it’d be my turn to provide a mini-guide for those looking to obtain their first credit card.

To recap what I wrote in my most popular post to date: Introduction to personal finance, here are the 3 main reasons you need a credit card in order of importance: Continue reading Credit cards for credit builders: what are your options? –Part 1