Credit Cards

Tips, news, reviews, caveats, trends, updates and analysis related to consumer and business credit cards, and prepaid debit cards. From the interest rate specialists @ FedPrimeRate.com

Wednesday, March 22, 2006

The Balance Transfer Offers From Citibank Keep Coming, and They Keep Getting Better!

The good folks at Citibank sent me an email today offering me yet another great deal on a credit card balance transfer: 1.99% annual percentage rate (APR) on transferred balances until the transferred balances are paid in full! Another great offer from Citibank, and I take my hat off to them for presenting it to me. This time, however, there's a fee involved--which is almost expected because the promotional APR is so low. Here's the catch:
"A fee of 3.0% (minimum $5.00, maximum $75.00) of each balance transfer amount applies to this offer"
What to do...What to do?

None of my other credit cards have a high balance, thanks to all the great balance transfer offers that have come my way. I currently have a $600+ balance on my BJ's MasterCard (it's a Chase card) because of a charge I couldn't avoid: the chair that I use all day for work fell apart, and I needed a quality replacement chair, and fast. I could use the Citibank offer to transfer this debt, but I'll most probably be able to pay this balance down to zero next week, so transferring this balance wouldn't be a smart move.

Then again, Prime Rate experts are predicting a prime rate of 8% by the time summer 2006 arrives, and most of my credit cards have a variable APR that's tied to the prime rate, so maybe I should think about a big ticket item that I know I'll need in the near future, charge it to one of my cards, then transfer that balance with the above Citibank offer. I won't try to "force it," of course, because that would be mindless consumerism, so I guess I'll see what comes to mind over the next couple of weeks.

Another concern: I'm already past the halfway mark on my credit line because of the 2 previous balance transfer offers I decided to accept on this particular Citibank credit card, so any transferred balance may cause my credit score to drop to an unacceptable level.

I have until April 11, 2006 to accept, so I can let this one marinate for a while as I decide if I want to use it.


I'm still waiting for a 0.99% APR balance transfer offer from one of the credit card companies with which I have a relationship. Anyone ever get a 0.99% offer? Please post a comment if you have. Thanks!


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Wednesday, March 15, 2006

TransUnion Unveils New Credit Scoring System: VantageScore

Here's today's big news: TransUnion, one of the nation's big 3 credit reporting agencies, has recently come out with a new credit reporting system called VantageScore. As if there isn't enough confusion with all the different credit scores already, right? Well, VantageScore aims to bring clarity to the world of credit reporting.

VantageScore credit scores range from 501 to 990, with scoring groups that mimic the intuitive scale that we all know from school: A through F. According to the folks at TransUnion, VantageScore will bring consistency to credit scoring, thanks in part to the system's ability to analyze data from all 3 credit reporting agencies at the same time. TransUnion also claims that VantageScore is better at predicting short-term delinquencies better than any other commercially available credit rating system.

More details can be found below in the snippet from yesterday's press release:


"New Score to Fill Void of Consistency and Choice in the Industry

TransUnion today released an industry first in the area of scoring models - VantageScoreSM. The new score is the first of its kind to leverage a consistent scoring methodology across all three national credit reporting companies. VantageScore brings clarity to businesses and consumers through an easily interpreted numeric score, and choice to the marketplace with a new, highly predictive scoring option.

Extensive testing throughout the VantageScore development process has shown that it outperforms and is more predictive than other commercially available models in the marketplace today in projecting short-term delinquencies. With its introduction, TransUnion has established a dedicated implementation team to work with customers to analyze and test VantageScore with their portfolios and to assist them in activating it with their internal processing systems.

'As markets have matured, so have customers' needs,' said TransUnion's Chet Wiermanski, one of the creators of VantageScore and vice president of Analytics for the company. 'VantageScore represents TransUnion's on-going commitment to proactively address the needs of our customers by developing highly predictive risk models.'

The score is unprecedented in that it looks at and analyzes data at the same point in time on the same consumer records from all three national credit reporting companies. VantageScore was developed using a national sample of anonymous credit information of approximately 15 million consumers and uses a score range of 990-501 and score groupings that approximate the familiar academic scale:


  • 901-990 A
  • 801-900 B
  • 701-800 C
  • 601-700 D
  • 501-600 F

'By developing a patent-pending approach to consistently interpret the credit information stored within each credit repository, also referred to as characteristic leveling, any credit scoring differences between the credit reporting companies can be attributed to data differences in a consumer's credit file rather than data interpretation - as is the case in most scoring models today,' said Wiermanski. 'With VantageScore, a significant achievement is accomplished by creating this consistent scaling across the credit reporting companies; an approach we believe is long overdue and will be universally embraced.'

One of the leading experts in the industry in the areas of scoring and analytics, Mr. Wiermanski was responsible for implementing TransUnion's first scoring systems for a variety of industries. He has done extensive work in the areas of predictive modeling and the use of event-based triggers and is the author of numerous white papers and studies on the subject. He also is an active member of Georgetown University's Credit Research Center.

To learn more about VantageScore or to schedule an interview with Chet Wiermanski, please contact Clifton M. O'Neal at 847-722-4843, Jason Nierman at 312-985-3059 or Jeff Bodzewski at 312-729-4270.

About TransUnion

TransUnion is a leading global information solutions company that customers trust as a business intelligence partner and commerce facilitator. TransUnion offers a broad range of financial services that enable customers to manage risk and capitalize on market opportunities. The company uses advanced technology coupled with extensive analytical capabilities to combat fraud and facilitate credit transactions between businesses and consumers across multiple markets. Founded in 1968, Chicago-based TransUnion employs 4,100 associates that support clients in more than 30 countries. Visit us at TransUnion.com."

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Tuesday, March 14, 2006

Consolidating My Debt While Avoiding Interest Charges: Zero Balance On All but Two of My Credit Cards

I recently transferred a few balances in order to consolidate my credit card debt and take advantage of some great lower interest balance transfer deals. Once again, I used a "2.99% until the transferred balance is paid in full" promotional offer that was presented to me by the folks who manage my Citibank Dividend Platinum Select® Card, simply because it was the best deal I could find at the time (Discover is still sending me offers of 0% APR on transferred balances, with the interest-free period recently extended until June 2007--which is a fantastic offer--but I'm still not sure about using Discover, and I really shouldn't be opening a new credit card account. I think I have too many as it is!)

Within a couple of weeks, I will have a zero balance on all my credit card accounts save two, which makes me happy: it means that I have far fewer accounts to monitor, thus reducing the number of did-I-forget-to-make-a-payment-on-one-of-my-credit-cards-this-month? panic attacks, I hope. These days, if you're late on a payment, or skip a payment, you not only get in trouble with the credit card account in question, but all your other creditors can raise your APR's as high as 29% (not all do, but they can); they may also nullify any promotional APR's related to any balance transfer deals you've signed up for, which for me would translate to a nightmarish escalation of debt. It's called Universal Default, and it's perfectly legal.

Stay tuned for more on my adventures with credit card balance transfers!

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Thursday, March 09, 2006

Interest Rates on Non-Reward Business Credit Cards Come Down

According to the folks at IndexCreditCards.com, interest rates--or APR's--on non-reward business credit cards fell this week. Now may be a good time to get that business credit card you've been thinking about, as The Fed will most likely be raising interest rates right into the summer.

Here's a snippet from today's press release:

"In an escalating interest rate environment for consumers, the average credit card rate for business customers actually went down this week, according to the weekly IndexCreditCards.com Credit Card Monitor.

So far, 2006 has been a year of steady rate increases in the consumer credit card market. The average credit card rate for standard, non-reward credit cards increased to 13.33% this week, up from 12.60% at the beginning of 2006.

Compare this to non-reward business credit cards and you find a significant difference. This week the average non-reward business credit card rate fell to 11.30%, just a shade less than when it started the year at 11.33%. Of note this week was Citi's move to chop down the rate on its CitiBusiness card two full percentage points, to 10.49% from 12.49%. Citi also added a 12-month, zero-interest introductory offer to sweeten the deal. And they're not the first issuer to increase its aggressiveness in courting small business owners.

'For a while now card issuers have been holding rates steady for business customers,' says Justin McHenry, Research Director for IndexCreditCards.com. 'But to see an actual decrease in the average rate during a time of consistent hikes for consumers is surprising. It tells you there's money to be made in the small business niche, and that no one is dominating that space right now.'

Credit card rates were steady in most other consumer and business credit card segments this week:

The average rate for reward credit cards offering rewards ticked up to 14.46%, from 14.44% last week and 13.80% at the beginning of 2006.

Business credit cards offering rewards did not follow the non-reward cards' movement backward, but neither did they move forward. The average rate remained at 13.42% for the third straight week, although up a bit from the 13.21% average rate at the beginning of the year.

Average credit card rates for college students remained steady (for once), at 15.87%. Nevertheless, that number has jumped mightily from the 15.18% average at the beginning of 2006.

Financial institutions represented in the survey include Advanta, American Express, Bank of America, Capital One, Chase, Citi, Discover, MBNA, National City, Providian, Pulaski Bank, U.S. Bank, Wachovia, Wells Fargo and more.

About IndexCreditCards.com
IndexCreditCards.com offers credit card research, tips, news and perhaps the most comprehensive index of credit cards available on the Internet today, with a master listing of over 800 credit cards as well as categorized lists based on interest rates, reward programs, business credit cards, student credit cards and credit cards for those with poor credit histories.

Credit Card Monitor is a weekly survey tracking average credit card rates in multiple card categories. Credit Card Monitor information provided in this release may be reproduced free of charge, provided credit is given to http://www.IndexCreditCards.com."

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