The Charge-It Blog

  • Kayla Albert

    What Costco’s card switch means for you

    What does Costco’s split from American Express in favor of Citigroup and Visa mean to cardholders? Three words: More cash back. And in recent weeks, the biggest U.S. retailer, Walmart, and Bank of America and Chase have stepped up the rewards offered with some of their own cards.

    The new card on the block
    Citi purchased AmEx’s portfolio of Costco-branded credit cards in February, and Costco AmEx cardholders will be able to use the new Costco Anywhere Visa cards starting June 20. No muss. Not much fuss (although some cardholders aren’t happy with the change). No additional application process for the new card and no credit pull.

    The new credit cards don’t have an annual fee, but Costco customers do have to pay the warehouse club’s membership fee of $55.what-costco-switch-means-2-u_Sm

    Already have a Visa? You’ll be able to use any Visa at Costco starting June 20.

    Until then, Costco shoppers paying with plastic will need to hang on to that American Express card. Costco AmEx transactions will cease after June 19.

    Richer rewards
    In addition to greater flexibility at the register (Visa is the largest card network in the U.S.), Citi is giving Costco customers better credit card rewards.

    Costco Visa cardholders will get 4 percent cash back on gas (up to $7,000 annually, then 1 percent after that), 3 percent on restaurants and certain travel purchases, 2 percent on purchases made at Costco and 1 percent on everything else.

    Under AmEx, cardholders received 3 percent on gas (up to $4,000 annually), 2 percent on restaurants and travel and 1 percent on everything else.

    Awards earned by Costco AmEx customers will be transferred to the new Visas after the switch.

    Credit card competition heats up
    Just weeks after news of the impending Costco switch to Visa, Walmart announced increased rewards for its credit cards and prepaid MoneyCards.

    These higher awards include 3 percent cash back on Walmart.com purchases, 2 percent on gas purchased at Walmart or Murphy gas stations, 1 percent on purchases made in-store and everywhere else.

    That’s up from $5 in cash back for $500 spent at Walmart, and 5 cents per gallon on gas at Walmart gas stations.

    Worth noting is that Costco rival Walmart’s Sam’s Club has its own cash back program similar to Costco’s new one — 5 percent cash back on gas at Sam’s Club, 3 percent cash back on dining and travel and 1 percent cash back on all other purchases. Sam’s Club went through its own card network switch in 2014, shifting from Discover to MasterCard.

    Starting June 1, Bank of America increased cash rewards for BankAmericard cash rewards cardholders, adding wholesale and warehouse clubs to the 2 percent cash back category, which includes grocery stores. The quarterly cap on cash-back earnings also increased to $2,500 from $1,500 on purchases at grocery stores, wholesale/warehouse clubs and gas stations.

    And Chase’s Freedom Visa now includes wholesale clubs, including Costco, Sam’s Club and BJ’s, in the 5 percent cash back category through the end of the year. The 5 percent cash back on purchases at wholesale clubs was to end at the end of the quarter, which is June 30.

    The bottom line
    With increased payment flexibility for Costco customers, better rewards for cardholders and increased credit card competition, it’s a win-win-win for card users.

    What do you think of the card switch and rewards changes? Drop me a line. Let us hear from you.

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  • Tom O'Connell

    Some restaurants switching to plastic only

    Cash once was king, but it’s being dethroned at some plastic-only restaurants.

    A 2014 study by financial services group TSYS found that 74 percent of customers of dine-in restaurants preferred to pay with a credit or debit card. Just 18 percent preferred cash.

    It’s also easier than ever for eateries to accept plastic, even food trucks, thanks to payment systems such as Square. Ninety-two percent of U.S. restaurants now take credit cards, according to 2015 data from Euromonitor.

    For these reasons — and because there’s less chance of robberies with card swipes instead of printed money in the registers — some restaurants are just dumping cash transactions altogether.

    Korean fusion chain Chi’Lantro in Austin, Texas, is going cashless this month. The local chain’s food trucks have been cashless for months for safety plastic-only-table-tent_Smreasons.

    Owner Jae Kim told Eater that though most of the local chain’s customers (85 percent) pay by credit or debit already, the shift to only plastic at all of Chi’Lantro’s rolling and sit-down restaurants is “a big risk for us.”

    Other restaurants accepting only cards and mobile payments include Split Bread in San Francisco and Bozzelli’s Deli & Pizza’s Washington, D.C., location.

    “Cash is archaic,” said Michael Bozzelli, co-owner of Bozzelli’s. “Going cashless allows us to expedite the transaction process.”

    Accepting plastic also increases sales, notes Anita Campbell, founder and publisher of Small Business Trends. Cards also boost tips. “Why? Simple: Consumers are not tied to what is in their wallets at the moment,” she writes.

    “When you pay cash, you can ‘feel’ the money leaving you,” writes money-management guru Dave Ramsey. “This is not true with credit cards. Flipping a credit card up on a counter registers nothing emotionally. A study of credit card use at McDonald’s found that people spent 47 percent more when using credit instead of cash.”

    At Chi’Lantro, signs noting the switch to cashless payments have been posted throughout the restaurants. Not everyone is pleased.

    Kim tells Austin television station KXAN that people have walked out the door when told of the policy, “because they just don’t agree with it.”

    “It may hurt our business in the beginning, but we think in the long term, it will really benefit everyone,” he says.

    For hungry boomers, cashless restaurants harkens back to actor Karl Malden’s advice in American Express commercials of the ’70s and ’80s: “Don’t leave home without it.”

    SEE ALSO: 3 groups slowing any shift to a cashless society in the U.S.

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  • Dawn Papandrea

    Do you need credit when you retire?

    When you think about the need to have a good credit score, you probably associate it with buying a home, getting a good rate on an auto loan, and other “young adult” milestones. That’s probably why nearly half of baby boomers aged 51-70 said in a recent survey that they believe one’s credit score matters less after age 70.

    While that may be true in some cases, the survey by TransUnion (one of the three major credit bureaus) revealed some common misconceptions about the impact that credit standing can have on the lives of seniors.credit-important-seniors_Sm

    Among the findings, just 61 percent said that credit score was important for co-signing loans for adult children or grandchildren, and only 32 percent thought their score could affect their ability to move into a nursing home or long-term care facility.

    Despite those findings, as the population ages and life expectancy increases, maintaining a strong credit score throughout your life is becoming more important.

    “Good credit cannot only help them finance medical expenses and long-term care, but also help them support children, grandchildren and other family members as they take on middle-life expenses, like buying a house or paying for school,” Ken Chaplin, senior vice president for TransUnion, said in a news release.

    Keeping your credit in shape as you age is not unlike maintaining your own health. Here are some ways to keep your score young and vibrant:

    • Stay active. Just as you power walk, golf, or do pool aerobics, it’s important to flex your credit muscles regularly, too. The simplest way to do that is to use a credit card or two for small purchases each month, and pay the bill in full. You might designate a card for your gas, your groceries, or your prescriptions, for instance.
    • Get regular check-ups. Checking your three credit reports on a regular basis, at least once per year via annualcreditreport.com, will help ensure that warning signs of fraud or identity theft don’t go unnoticed. A routine exam will confirm that all of the accounts listed are accurate and up to date.
    • Get fit for your golden years. As you get older, you should keep aiming for as close to a debt-free lifestyle as possible. Keep paying all your bills on time, and work on eliminating any lingering credit card balances if you have them.
    • Start a healthy budget diet. As you approach your nonworking years, it’s a good idea to practice living on what your fixed income will be when you retire. Anything extra that you can put into savings and/or retirement accounts to help ensure that you don’t have to borrow will help give your credit status longevity.

    While you might not think that your credit score will come into play later in life, taking good care of it could serve you well should the day come when you need to sign for a loan or qualify for a great interest rate for something. In short, keeping up with your financial fitness regimen is something that can benefit you for a lifetime.

    SEE ALSO: 7 ways to keep your credit strong in your later years

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  • Peter Fullam

    Women handle credit better than men, study finds

    Women are better than men when it comes to credit and financial management, a new study by Experian finds. Women have higher credit scores, less debt, more open credit cards and fewer late payments.

    “Even with more credit cards, women have fewer overall debts and are managing to pay those debts on time,” Michele Raneri, Experian’s vice president of analytics and new business development, said in an email. “Men appear to be taking on a bit more than women, specifically when it comes to the homes and cars they buy, which could be affecting their credit scores.”card-match_Sm

    The study by one of the three major credit score bureaus noted six key areas in which women outperform men:

    • Credit scores: The average score for women was 675 compared with 670 for men.
    • Average debt: Women have 3.7 percent less.
    • Number of open credit cards: Women have 23.5 percent more.
    • Revolving credit: Women’s use of available credit was 4.2 percent lower.
    • Average mortgage amount: Women’s loan amount was 7.9 percent less.
    • Late mortgage payments: Women had an 8.1 percent lower incidence of late payments.

    “Paying your bills on time is the single most important contributor to good credit,” Raneri said. “While the instances of late payments are relatively low for both men and women, it’s important to understand that late payments negatively affect your ability to get credit since they indicate a stronger likelihood that you will make late payments again or will be unable to pay your debts in the future.”

    Experian’s findings may not come as a surprise. Several previous studies have found women to be better budget minders than men, and that both sexes generally agree on that.

    A 2009 global Reuters Synovate survey of more than 9,000 men and women in 12 countries found that women are more responsible with their money, less likely to get in debt and work harder to become financially independent. More than half the respondents of both genders agreed women are more responsible.

    “Looking closer at our data … we see that women working full time in the United States earn approximately 23 percent less income than men, but that women are taking steps to manage their finances better than men,” Raneri said in comments with a similar 2013 report by Experian.

    Minnesota was the state the highest credit scores for both men and women, 703 and 710 respectively. Nevada had the lowest average credit scores for men, 645, and Mississipi had the lowest average credit scores for women, 640, according to the latest report.

    The study was conducted using 750,000 consumers from Experian’s December 2015 consumer credit database, which represents a wide spectrum of ages and backgrounds.

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  • Kayla Albert

    Some debts can give you a tax break

    Sending in mortgage payments and chipping away at your student loan debt might be painful throughout the year, but at tax time these debt payments can help lessen your obligation to Uncle Sam. If you haven’t already filed your taxes, you may be able to cash in on these tax breaks.

    College tuition and fees
    If you attended college during the 2015 school year, this big deduction can lower your tax. The American Opportunity Tax Credit allows you to claim up to $2,500 per student as long as your adjusted gross income (AGI) is at or below $80,000 for single filers and $160,000 for married filers. The credit can be used toward required course materials (books, supplies and equipment) as well as tuition and fees.

    Some debt could give you a tax break

    Student loan interest
    If you’re paying back student loans, you can deduct up to $2,500 of qualified student loan interest per year. The fine print: Your  modified AGI must be $65,000 or less if you’re filing as single or head of household. If you’re married and filing jointly, your  modified AGI must be $130,000 or less. If your AGI is between $65,000 and $80,000 (single) or $125,000 and $160,000 (married), you could qualify for a smaller deduction.

    Mortgage interest
    Mortgage interest can take a big chunk out of your monthly payment, but it’s mostly all tax deductible. You can deduct the interest paid on home loans up to $1 million, or $500,000 if you’re married and filing separately (as each spouse can deduct up to half of the $1 million). If you have a second home, you can write off that interest as well — as long as the total for both your primary and secondary homes is under that limit. 

    Private mortgage insurance
    If you didn’t put at least 20 percent down when you purchased your home, you’re likely dealing with a pesky   called Private Mortgage Insurance (PMI). This too might be deductible at tax time if your loan was acquired in 2007 or later, the home is your primary residence and your AGI is less than $109,000 (or $54,500 for married taxpayers filing separately).

    Your car
    If you’ve jumped on board with the ridesharing economy, or you use your car for making deliveries, for example, that set of wheels could deliver a deduction on your taxes.  For 2015, the maximum first-year depreciation write-off for a new (not used) car is $3,160 plus up to an additional $8,000 in bonus depreciation, according to TurboTax’s tax tips for small businesses.

    For a used car, the maximum first-year write-off for 2015 is a much lower $3,160. (These figures assume 100 percent business use.) If you bought a sweet SUV ride to pick up and drop off riders — or packages, you may be able to claim a much bigger deduction.

    Beware, however, you can only take this deduction in the first year you began using your car. If you weren’t using it for business at the time, you’re out of luck.

    While tax breaks will never make up for the expense of these debts, the deductions will at least lessen the blow of your final tax bill — or put a few extra dollars back in your pocket.

    SEE ALSO: 1099-C: Not all forgiven debt is forgotten at tax time

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  • Kayla Albert

    Does your card offer these unusual perks?

    That  credit card that’s handy for purchases also may offer some sweet and unusual discounts, freebies and cash back. In addition to including money-saving benefits such as price protection and extended warranties, credit cards are offering more unique perks.

    Here are a few of the more interesting ones:

    Discounts on Uber rides
    Leaving your car at home just got a little smarter. Through April 30, 2016, Capital One Quicksilver and QuicksilverOne cardholders  can get a  20 percent discount on all Uber rides, plus 1.5 percent cash back on the fare price.  Oh, and all new Uber riders using the promo code RIDIN20 can get their first ride free (up to $20) through April 30. That promo code applies for Capital One cardholders and anyone else using Uber for the first time.pay-by-selfie_Sm

    American Express cardholders with Membership Rewards can score 2 reward points for every $1 spent on Uber fares through July 31, 2018, Cardholders also receive up to $30 off their first Uber ride using the promo code UBERAMEX on the Uber app.

    Cash back bonus for good grades
    Discover is challenging the notion that good grades don’t come with a monetary payback with the Good Grade Reward offered to new card members with a Discover it or Discover it Chrome cards for students. Students enrolled in college with a GPA of 3.0 or higher can receive one $20 credit per school year.

    Free rounds of golf
    If you have the Citi Prestige Card, you can practice your swing with three free rounds of golf per calendar year. There are over 2,000 public and private courses around the world where you can cash in this benefit. Just  be sure to cancel any tee-times you can’t make, or you could be on the hook for the charges. 

    Access to your favorite NFL teams
    Die-hard football fans can now take their fan status to a whole new level: the NFL Extra Points Credit Card. With this card you will get 20 percent off all purchases at NFLShop.com and 2 points per $1 spent on NFL or team purchases (including tickets). The best part? Points can be redeemed for VIP NFL experiences.

    Free museum admission
    If you’d rather browse art exhibits than watch football games, a Bank of America or Merrill Lynch credit card may be just the ticket. With either of these cards, you can get free general admission on the first Saturday and Sunday of each month to one of 150 museums, science centers and more in 33 states. 

    Did we miss some great card perk out there? Have you ever received a unique perk for using your credit card? Leave a comment and let us know what it was!

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  • Brianti Downing

    Pay for your purchases — using a selfie?!?!

    Forget your password? Starting this summer you may be able to snap a selfie to verify your identification for payment.

    Mastercard announced at the Mobile World Congress in late February that customers soon will be able to choose facial recognition (a selfie) or fingerprint identification to approve their purchases, says Dennis Gamiello, vice president of iIdentity solutions at MasterCard. pay-by-selfie_Sm

    “Passwords are a pain. They’re easily forgotten,” he says. “We want to do away from them to make sure there’s a more safe and seamless experience when you shop online and deal with your bank.”

    To sign up for the selfie-pay program, you’ll download MasterCard’s Identity Check mobile app and upload a photo of yourself. Gamiello says that image isn’t stored but encrypted in a series of ones and zeroes that will focus on your most prominent features for facial recognition. When you make purchases, you’ll take a selfie to verify it’s you. (You have to blink so it’s clear it’s not someone just holding up a static image of you.)

    Why selfies for payment authentication?

    “Millennials relate well to selfies, but other groups relate to it as well,” Gamiello says.

    Facial recognition and fingerprint identification fight identity fraud, which is increasing. A 2016 Javelin study found that identity fraud  rose by 3 percent in 2015, amounting to 13.1 million victims.

    There’s no “silver bullet” to security. Scans of a fingerprint, facial features or an eye’s iris saved in a database — like your Social Security number — could be stolen in a data breach.

    MasterCard tested its Identity Check app in the United States and the Netherlands. For the U.S. test, the card network worked with Silicon Valley’s First Tech Federal Credit Union, which has customers in the high-tech community — a tough crowd that probably knows more than most of us about security.

    With the Dutch participants, nine of 10 indicated they would like to replace their password with biometric identification. Almost 75 percent said they believe the use of biometrics will reduce fraud.

    Biometric security — checking someone’s identity using characteristics such as face, voice or fingerprints — has been in development for decades. For example, San Antonio-based USAA became the first U.S. financial institution to allow customers to log onto its mobile app using facial and voice recognition.

    And Visa announced at the Mobile World Congress its own partnership with ID specialists Morpho to work on a range of biometric security solutions.

    For MasterCard, selfie and fingerprint identification are “just the beginning,” Gamiello says, adding Identity Check could be integrated into e-commerce sites, like Amazon, in the future.

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