Many young folks, especially those that haven’t been in the US that long, conflate debit cards with credit cards. Debit cards have almost nothing in common with credit cards despite their similar physical appearances.
Back in January I shared with you my personal experience with Bank of America throughout my credit journey: https://hiepsfinance.com/2013/01/30/bank-of-america-is-awesome/ . To sum it up, Bank of America has done all the good things for me: gave me a secured card with cashback rewards, unsecured it and eliminated the annual fee a year later, and then raised the credit limit six-fold! 2 days ago I took another step further and asked them to lower my APR of 20.24% typical of secured cards but a little high for a non-secured card.
The representative looked at my profile to see if my account would be eligible for a lower APR. Sure enough, she came back with a new interest rate of 11.99%, the lowest in my current credit card portfolio by a wide margin!
Let me clarify why I asked for a lower APR. I didn’t ask for an APR lowering because I planned to carry a balance; I wanted a low APR in case of emergency when I may have to make a large purchase without sufficient cash. If I had a house struck down by lightning for example, I’d need some cash flow available immediately to start rebuilding, and if I had just paid a large medical bill I probably wouldn’t have the cash at my disposal right away. In that kind of scenario, the BofA card with a relatively reasonable APR would come in handy.
I may give BofA another call in a few months to see if they can bring the APR down to below 10% – that would be the last thing I need from Bank of America for this incredible Cash Rewards card.
I am a loyal customer of Bank of America, at least for their credit card and banking products. If you are still looking for a bank to get your first credit card from, seriously consider BofA.
Hope you have a great weekend!
Richard (Hiep Tran)
I personally don’t carry a credit card balance unless my credit card is offering a 0% APR promotion because one of my goals in the credit quest is to build a perfect credit history without paying a penny in interest. But from my observation, I’m not the norm. Many people I know carry balances from time to time, and when they come to me for advice, I always tell them to at least pay the minimum to avoid late payment fees, and over time I have helped them save quite a bit of money from that.
Honestly though, paying just the minimum amount is never going to pull you out of debt since credit card interest accumulates everyday at an absurdly high rate. There are many reasons to underestimate interest charges.
Continue reading Why is your credit card bill so huge: how credit card interest is calculated and what grace period means
I reviewed Bank of America’s BankAmericard Cash Rewards credit card in this post: Anatomy of a credit card: Bank of America BankAmericard Cash Rewards review
Next in the line is Bank of America’s BankAmericard Travel Rewards card, one of my favorite credit cards, and one of the most under-rated rewards credit cards.
My first blog post covers the benefits or credit cards that are often ignored. I have also covered several features of credit cards in a variety of posts. I’ve always wanted to consolidate all these features in one post, and what better way is there than performing a hands-on analysis on a real credit card? Today’s post features Bank of America’s flagship BankAmericard Cash Rewards.
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.