Credit Card Deals (U.S.)

Chase Sapphire Review

The Chase Sapphire credit card is a fairly new, potentially great option for higher income individuals who enjoy traveling (hence Chase Sapphire's heavy promotion on The Travel Channel lately). I'm working on making my posts shorter and more to the point (less ranting!), so here's what you need to know in order to decide if you should get one.

The good: 

-- Your reward points "never expire"

-- No annual fee for this card (basic Sapphire version only)

-- 10,000 bonus points after your first purchase using Chase Sapphire (click here to take advantage of that promotion)

-- Higher-end Preferred version of the card has an $85 annual fee, waived the first year, and also offers a 7% annual points dividend, 25% greater travel rewards, & you earn 15,000 points after spending $1,000 in 3 months. That's not much at all, especially if you travel (only $333 and change per month). 

-- Ability to use the Chase Blueprint service with both basic and Preferred Sapphire versions (allows you to choose "full pay" for transactions you want to pay off immediately without accruing interest).

The bad:

-- Appears to be no 0% APR intro period for either the basic or Preferred Sapphire cards. At time of publication, both cards had a 12.24% variable purchase APR (not bad, but certainly lame to see a lack of a 0% promo APR here).

The verdict:

A seriously solid, and attractive looking, card to have in your wallet. Chase Sapphire will be especially valuable to frequent travelers, either business or pleasure, since the card's rewards revolve around hotel/flights and the Preferred version offers enhanced travel rewards...

So a good card for the affluent jet set, but not necessarily my first choice for those new to the credit card game. Also an attractive looking card that is looking to "brand" itself as for the wealthy only; compare to American Express high-end charge cards like the Platinum and Gold, or the Visa Signature line of credit cards.

Instead, if you're new to credit, look for a card that offers a substantial 0% promotional APR period of at least 6 months, or preferably 12 months, with a reasonable purchase APR thereafter. Chase Sapphire has no 0% APR intro, and this is, in my mind, a small drawback.

But if you already have good credit, I would definitely apply for the regular Chase Sapphire card, to get those 10,000 bonus points -- and since it doesn't have an annual fee.

Overall score: 8 / 10

Disclosure: As of June 3, 2010, we now have a financial relationship with this company. This web site participates in their affiliate program. Someone has to make money from all this Internet stuff, right?

The Only Card Error I Like Seeing

Screenshot from my Citi credit card account earlier today... possibly the only error message I actually like seeing! 

It is so rewarding to have the credit cards at my mercy, and not the other way around.

Citi is my biatch.

My cash only experiment is going well. I am definitely spending less money, but change is a major annoyance and dollar bills in NYC are positively filthy. I actually noticed a bloodstain on one the other day. So gross. 

Anyway, Happy New Year everyone! Here's to health, greater wealth, and total credit card domination in 2010!

Outlaw

"Should I Get American Express?"

Is American Express worth getting, or keeping?

This is a question that people ask me surprisingly often. If you've been a loyal reader, you will know that I have been torn about American Express credit cards & charge cards in the past.

I like the company's aspirational brand image, I think their Web site is superior for a number of reasons, and customer support is still (slightly) more intelligent than at many other credit card issuers.

What I don't like: they have become VERY conservative about extending credit lately. At least in my experience. And this seems somewhat problematic considering they are a credit card company!

Also, they aren't accepted at as many locations as Visa or MasterCard branded cards. But when you play the Visa vs. American Express game, it's sort of like comparing apples and oranges.

American Express is both a card brand and an issuer, whereas Visa is just a brand -- they don't issue their own cards. Instead, the cards are issued by member banks, such as Bank of America, Chase, Citi, Wells Fargo, etc.

So, if you follow me here, AmEx is sort of like the Apple of the credit card industry. Visa and MasterCard are more like Microsoft.

Apple makes the underlying software and the hardware. Microsoft makes the software; they don't actually build your laptop or smartphone. 

Who cares? I think American Express still does a very good job at certain things, probably because of their "unified" business model. Here are the perks:

1) A good rewards program.

2) A great Web site: you can dispute charges online, see a breakdown of how much of your restaurant tab went toward the tip, etc.

3) Speaking of charge disputes, American Express seems more committed to the customer than many other issuers. If a merchant screws you, more likely than not AmEx will side with you and reverse the charge. 

4) Warranty extension on certain purchases.

5) Good promotional cards. I like the JetBlue AmEx card a lot; you get bonus points to begin with and the annual fee ($40 I believe) definitely isn't much considering you can earn a lot of free flights with this card.

Overall, I would say go for American Express. It's a nice alternative to have in your wallet. Just don't make it your primary card. I use a Citi MasterCard with cash-back as my primary. The cash-back checks come quickly (within 7-10 business days of making my request) and my Citi card has a very high credit limit... plus, it's a card I have had open since college, so it is a good "aged" account to have on my credit report.

Some tips:

-- Get an American Express credit card, not a charge card. With credit cards, your credit limit is reported to credit bureaus. With charge cards, it is not, since you do not have a "pre-set spending limit." Of course, in reality, you DO still have a credit limit of sorts -- it's just that the limit isn't public info. It is hidden somewhere in AmEx fantasy land.

If you doubt this, try to purchase a private jet with your "no pre-set spending limit" American Express charge card. You will be declined. There are limits. And the limits are much lower if you are a new customer, since they don't know as much about your spending/payment habits yet.

-- Avoid any AmEx card with an annual fee, with the possible exception of the JetBlue card I mentioned earlier. There are a lot of no annual fee AmEx cards... why pay a fee when you can go free? I only pay an annual fee if the immediate benefits far outweigh the cost of membership.

-- Have them send you free text message alerts and set up autopay. This way you won't miss any payments, and with the text alerts you will always know how much credit you have left. Note: you have to pay your bill manually online until you receive notice that your autopay enrollment has kicked in. This can take a billing cycle or longer to take effect.

That's it! Enjoy, and let me know what your experiences with the company are like... As I have said, it isn't what it used to be. But it's still a cut above most other issuers in many ways.

stay debt-free and healthy,

Outlaw

How To Win The Lottery

Interesting little fact: all of the places I have been to in New York do not let you buy lottery tickets with a credit card. Why do you think that is?

So you want to learn how to win the lottery. Most personal finance blogs would scoff at something like this, but I am not here to be your voice of conscience. Do what you want. Here's how to boost your odds of winning. 

The Mega Millions or Powerball are not your best bet: you could play those consistently for the next 14,000 years and still not win any substantial amount.

So we will focus on the twice per day "Pick 4" and "Pick 3" (alternatively called "Numbers" in some states). With Pick 4, your odds of winning are 1 in 9,999 -- assuming you play "straight" as I do. Straight means you win only if your number comes up precisely in the order you chose it. For example, if I chose 1984, I would win $5,000 per ticket held only if 1984 came up. If 1948 came up, I would win nothing.

There are also "combo" and "box" plays but I avoid those: the payout is not even enough to be interesting to me.

You could conceivably win the Pick 4 within 14 years, assuming daily play of the Mid-day and Evening draws.

With Pick 3, your odds are significantly improved: 1 in 999. I have won this one before.

Here's my method:

1. Stick with the same number. Don't dilly-dally or "flip-flop." Let's say you pick 585. So you play 585 straight Mid-day and Evening every day, including weekends.

2. Pray or meditate. HA!

3. Three weeks has passed, and your number still hasn't come up. Assuming you have plenty of money to cover everything else in your life -- investments, the rent, feeding your kids -- and the lottery is a simple pastime, up the ante. Now play $2 Mid-Day and Evening on your number.

4. Another three weeks passes, you still haven't won. Up the ante to $5.

And so on... When you eventually win, assuming you have put down a $5 wager, you will win $2,500 -- not $500. (It is $500 per $1 winning play typically, although I have seen limited time promotions where it is $600 per $1 winning play).

IMPORTANT WARNING: Don't be a dumbass. I only treat the lottery as entertainment. Sometimes I win, but usually I don't.

When I was a kid, I was obsessed with paranormal and "psychic" abilities -- the twice per day Numbers seemed like the best way to test my theories out. My conclusion: there is no way to foresee future numbers. There is supposedly a tribe that believes smoking shriveled vulture brains allows the smoker to see future winning lottery numbers. Obviously, this tribe is not terribly sophisticated. The vulture brain "joint" sells for about 4 British pounds in their marketplace: if it were capable of showing you winning Powerball numbers, you would think the market price would be a bit higher, yeah?

If you don't have the money to throw away on lottery experiments, do not play. A good no-load mutual fund or low expense ratio ETF is a far more certain path to eventual wealth than any lottery strategy.

Winning the lottery should not be your retirement plan. The end.

SECOND NOTE: If you do win, remember to pay taxes on all lottery earnings. Some idiots think "they" will never know if you don't report these earnings on your tax return... Hmm. The (state) government is the one that pays you. Do the math.

Credit Card Letters: Did You Get One?

Yep, I got two credit card letters this week, both of them from Bank of America.

I expect to get more soon: credit card issuers need to communicate changes to you ahead of the CARD Act law, which takes effect in February 2010 (most provisions anyway). 

Luckily, neither of my credit card letters were announcing bad news... Both of my interest rates remain the same, and moving forward neither card will have an annual fee (same as now).

Nice job, Bank of America, for finally "getting" it. Had you assessed an annual fee, even for $15 or $20 per card, I would have swiftly closed both accounts and taken my business elsewhere.

But instead you played it cool. Samuel L. Jackson or Dos Equis Man cool.

The letters were friendly, easy to get through, and informed me of the most salient aspects of the CARD Act (such as the fact that beginning in February, payments will go toward the highest interest rate portion of your credit card balance first -- this is a huge benefit for many folks, especially those carrying big cash advance balances on their accounts).

Do me a favor and post in the comments section (below) if you received a credit card letter recently. Summarize what the letter said. Should be interesting to see if we are all getting, more or less, the same letters or if they are tailored depending on the customer's usage.

Thanks,

Outlaw

Photo via

Mint.com Review: Is Mint Worth It?

Is Mint.com, the free online money management service, worth using?

This is going to be a brief review. I wish I had more time to go in-depth.

Mint is a great service. It is attractive looking, it is secure (so far!), and for many folks Mint.com is an effective way to see where your money (credit cards and debit cards, obviously cash is not measured) goes each month -- what "categories" you are spending on, how you can improve your budgeting, & the service also "suggests" better credit cards and banks to you based on your individual circumstances. Plus beautiful pie charts and a great interface.

The downside? There are two, as I see it:

1) If you have very simple finances, as I do right now after pledging to dramatically simplify my personal finances, Mint.com is sort of overkill. I have two checking accounts; one is simply an emergency backup. I am taking a break from regular credit card use. So for me at least, Mint would be a hassle to use... I can just log in to my bank's mobile version on my iPhone and see what my balance is, and recent transactions. I don't need or want any more analysis than that. And I don't want to remember yet another username and password.

2) Mint could theoretically make you lazy. Before I purchase anything, I seriously evaluate it. "Is this something I need, or will I regret paying $800 for a watch three weeks from now? Am I willing to part with $800 now that could earn me thousands of dollars over the course of my lifetime, provided I invest it in the right mutual fund or use it toward growing my small biz?" Yes, this is how I really think. And yes, I am single again. (HA!) My logic is not exactly the most enticing. I don't buy anything I don't truly need.

Mint.com users, however, may grow to rely on the service to scold them after the fact. "Oh, I spent $3,000 on entertainment this month? I'll really have to cut back on that moving forward."

No. Since I don't have Mint.com, or any categorized spending breakdown, I just need to be smart at the time of purchase.

If I'm not, I'll run out of money in my checking account. And that would be bad. 

The bottom line: if your finances are complex, definitely give Mint a try. But also work to simplify your accounts as I have done. Eventually, you won't even need Mint. You'll just need to review your charges once per day. It will take you 30 seconds, total, to manage your finances. I think that's true freedom.

Credit Card Strategy

A smart credit card strategy is necessary when dealing with credit cards for the first time. Or when trying to recover from existing debt.

They can be a tremendous asset, or a serious adversary... Perfect example: when I was in college, before I had even $1 of income, I was offered close to $20,000 total credit line amongst all of my credit card accounts. (Of course, at the time I was dumb and loved the huge credit line.)

It's just insane. A student with no income, and they were giving me $20,000 of unsecured credit.

Lol.

Of course, this is how they suck you in... textbook purchases, then Starbucks, then a few nights out drinking. Before you know it, you have $5,000 or more in credit card debt, with no active income to pay it off swiftly. They make a killing in interest charges as you slowly pay it down, $100 or $200 at a time.

What's the secret? Don't get a credit card until you have a steady income. Period. This is the only credit card strategy that will keep you safe long-term.

If you need a loan to "live off of" until you get a job, credit cards are worse than organized crime lenders. Yes, you would practically be better off getting a loan from the mob, in terms of interest rates and repayment terms.

Healthy alternative: Get a regular loan instead, or hit up a family member or friend for a personal loan. Or consider one of the "social lending" sites such as Prosper.com or Lending Club.

ONLY use a credit card when you have the money, in your checking account right now, to pay it off immediately. This way, you beat the credit card company at its own delicious game:

1) You get air miles or cash-back rewards (1-5% cash-back, depending on the credit card offer & promotional terms).

2) You build up a positive credit history, which can save you thousands of dollars over your lifetime.

3) You get a "free" short-term loan, provided you pay the balance in full each month before your grace period ends.

4) You get the added fraud protections that come along with purchasing goods using a credit card, as opposed to a debit card (credit cards typically have $0 liability and arguably better in-house fraud screening). 

It's not sexy, but it is the golden rule: never use credit you cannot immediately repay.

Don't take my word for it, though. Famous personal finance gurus like Dave Ramsey will tell you exactly the same thing. In fact, Ramsey will tell you not to use credit cards at all (he hates them). 

Credit can be a tool. But it is dangerous. If you have limited income now, just live with it. Don't spend above your means because you want to feel like one of the affluent pretty people you see on TV. Those perfect happy people don't actually exist (look at the problems Charlie Sheen is facing right now, or Tiger Woods' marriage problems, or Nicolas Cage's serious money problems).

If you are patient and stash your money in a high yield savings account, eventually you will be able to afford the lifestyle you deserve. It may take 6 months, or a year, or even a few years.

But it will be so worth it. When you go on a high-end vacation or buy a new car, you won't be quietly sweating over how you're going to "pay it all off." Instead, you will be thrilled that your credit card gave you 1% cash-back, or a ton of air miles (for the next vacation!), and you will pay off the card immediately upon returning from vacation.

This takes a bit of discipline, to be sure. Most people take the quick and dirty route: they rack up debt.

Don't be like "most people." It's called personal finance for a reason. It's your personal decision. Live below your means and, in time, you will live a life of splendor as your colleagues and friends labor to pay down their absurd debts.

Believe me, I have been using credit cards for the past 6 years, and have made a lot of money off of the credit card companies. Sound credit card strategy, applied consistently, is the way to beat them. If you are attracted by the promise of easy free stuff, though, that stuff will eventually own you.

Not philosophically. Literally. Your debts will own you.

Outlaw

ShareBuilder Review: Short Version

I have a ShareBuilder account, and must say, not terribly thrilled.

It's been dormant for over a year now, but today -- after good discussion with a family member I trust -- came to the conclusion I can likely make a good return over the next three months by holding a certain ETF. This family member knows a lot about stocks, and energy ETFs in particular.

So after work, I log in to ING Direct (which now owns ShareBuilder) and click through to my ShareBuilder account. Since I have plenty of money in the ING account at the moment, I was going to fund it through that.

An error message appears. I have been BLOCKED from adding funds to my account. Huh. Apparently because of an issue over a year ago, where their "express funding" option caused my checking account to go into overdraft, and set off one of those infamous cascades of non-sufficient fund fees... and being treated like a deadbeat by customer service. (The issue was settled a year ago as well.)

Now, this is unforgivable for a couple of reasons:

1) I have money in my ING Direct accounts. ShareBuilder can see this, since the accounts are all tied together (in fact, on my ShareBuilder account summary it lists the balances of my ING accounts).

2) Out of all the things to block a returning customer from doing, ADDING funds to the account shouldn't be the first feature to go. If anything, block a customer from withdrawing funds until you get everything sorted. But why keep me from even adding money? That's absurd.

Also, the user interface at ShareBuilder is a bit antiquated, and the research resources and chart tools are woefully lame when compared to TD Ameritrade, E*Trade, or even Zecco.com.

Also, I find ShareBuilder's pricing structure a bit deceptive. They advertise $4 trades, but this is ONLY if you are doing an automatic scheduled investment -- which they only do on Tuesdays.

What if I want to buy on a Wednesday to take advantage of a dip? They don't allow that; instead, you need to place a "real-time market order" which costs $9.95.

For that much money, you might as well go with something that has more tools and flexibility -- and that allows me to add money when I want to!!! I am legitimately annoyed still. Blood pressure is elevated. I need some ice cream or soothing Tibetan meditation music to get over it.

I would recommend new traders/investors check out E*Trade instead. I like them the best. I have also used TD Ameritrade in the past and they run a professional, flawless operation as well. Have not used Schwab yet, but plan to soon so I can review it.

I'm sorry to trash an ING product here, because I love everything ING Direct has to offer in terms of savings and checking accounts, but ShareBuilder is just lame. (And I could score some major free trades by referring you to them, but that's not my bag, baby. I only refer you guys to products I actually use and love.)

They haven't improved it at all since they acquired it; ShareBuilder just has an ING logo in the top left hand corner now. That's the only change I can see.

How about charts that don't look like something from 1998? How about allowing good customers to add money? How about lower-cost market orders? How about better brand integration with ING Direct?

Goodbye, ShareBuilder. If ING Direct suddenly blocked me from depositing money when I wanted or needed to, I would close those accounts in a flash, too.

Outlaw

How To Become Wealthy (Millionaire Strategy)

I've recently finished interviewing a handful of self-made millionaires in NYC.

My reasoning was simple: if someone else has become a millionaire, that means maybe I can do the same, provided I learn what they did to get there. This would also save me a lot of time, possibly shaving years off my "learning curve" in my struggle to become wealthy.

Luckily, MANY people have become millionaires. Their particular traits vary quite a bit, of course, but I have found 3 striking commonalities:

1. They spend less than they earn, without exception. Many of them underwent periods of "ultra frugality" at the beginning of their wealth building journey, until they had enough capital to invest in something more lucrative.

2. They want to become wealthy. Becoming a millionaire wasn't just a byproduct or happy accident. We always read stories of how if you "follow your passion, you'll eventually come out ahead financially." Some of these folks followed their passion, others didn't. But all of them kept the end goal in mind: wealth.

3. They don't lament the rules. What do I mean by this? If you want to become an NBA player someday, you don't go around saying, "Damn, if only they gave you a point every time the ball hit the hoop, regardless of whether it goes in... why are there 'three-pointers' in the game? They should get rid of that." And so forth. Basketball players become as skilled at their game as possible; they don't try to succeed by questioning and arguing against the rules.

And yet, so many wannabe wealthy types do this to the point of absurdity. When I first meet someone, I can usually tell within a minute or two of conversation if they are someone who will be financially independent within a few years -- or never independent.

"They need to lower taxes... they need to raise taxes... the corporations are so ruthless, it's impossible for the little guy to get ahead in America today... free trade..." Etc.

If you don't like the fact that some of your money is being eaten up by taxes, the solution is very simple: MAKE MORE MONEY. Then you'll have more left over after the tax man takes his cut.

Instead of increasing income, though, many would seemingly prefer to join tea parties. Making posters and shouting slogans won't add to your bank account. And it won't likely change the tax code any time soon.

And losers who cry to me about how ruthless and efficient and profit-motivated modern corporations are... Well, after hearing all of that, I go, "Man, these corporations sound great. Only interested in returning value to their shareholders (me)? Obsessed with managing resources efficiently? Where can I sign up for a piece of this action?"

Oh, that's right, there's the stock market, silly -- you can own a piece of that ruthless action. Or you can start your own business. Or you can invest in a friend's business.

Complainers complain. Winners focus on playing... and winning. The rules haven't changed all that much. I was re-reading part of billionaire oil man J. Paul Getty's How to Be Rich the other day (yes, on Christmas day, ha!) and was totally SHOCKED by some of what he said.

He talked about how losers were always complaining about "creeping socialism" and low wages and too much regulation, or not enough regulation. Even though his book was compiled well over 50 years ago, the same concerns are voiced today: minimum wage is too low, Obama wants to socialize everything on planet Earth, companies aren't well-regulated, companies are too regulated...

You can be a player, or you can be a critic. I'm not saying I love everything the way it is right now. But I don't have the time to be a complainer. I'm too busy making money, building wealth, and enjoying the ride.

Also, interesting parallel: great artists and writers are RARELY, if ever, the great critics. You won't see Roger Ebert making any blockbuster films or starring in them, even though he is an excellent critic.

If you want to be a critic, you'll miss out on a lot of opportunity. 

Just some fresh food for thought... By the way, you can read more of my observations here. 10,000 readers per day can't be (entirely) wrong.

Outlaw

Photo Credit: amagill / Flickr

Bad Credit Cards

What do I think of "bad credit" cards?

A so-called bad credit card is called that because it is offered to those with bad or weak credit.

Although the card itself may not be bad, it often times offers you bad terms, a weak reward program (or nothing at all), and high interest rates.

Rather than seeking out "bad credit" cards or other loans designed for those with a shady financial past (payday loans and cash advance loans, for example), work to improve your finances.

Start paying your bills on time. Settle any past due accounts. Get any erroneous information removed from your credit report. Save as much as you can; pay for only those things you can afford.

When you're in a bad place financially, the last thing you want to be doing is taking out loans on unfavorable terms.

If you can't afford something, acknowledge that, rather than denying it. There are things in this world I cannot afford. That doesn't mean I take out a loan to get them. I just learn to live without them.

If you absolutely NEED a loan to keep your heat on or feed your kids, or pay the tuition bill for this semester at college, consider getting a loan from a family member or friend.

Benefits: you won't pay any interest, you'll be able to pay it back over time, and if you slip up it won't destroy your credit any further.

Drawbacks: you could piss off a family member or ruin a friendship.

Still, it's better than paying outrageous interest. When you sign up for a credit card, it should be on YOUR terms. You should be getting one of the best credit cards out there -- with 6 months or 12 months of 0% APR, and then a reasonable interest rate after the promotional period expires. With a large line of credit.

Don't waste your time with strings attached lame cards for those with bad credit. Those cards exist to take advantage of you. Don't waste your time with a secured credit card either: if my dog can get regular (a.k.a. unsecured) credit card offers, so can you. Just beef up your credit score a bit and apply for a regular card, even if it takes a couple months of work.