« April 2006 | Main | June 2006 »

May 11, 2006

Taking credit card money $25 at a time

I got an email the other day asking me if I felt guilty about applying for a credit card just to get a $25 sign up bonus with no intention of ever using the card. Well, credit card issuers earned $16 billion (yeah, $16,000,000,000) just in penalty fees last year. Ten years ago, the average late fee was about $12. Five years ago, it was $27. Now, the average is $34. One credit card in my wallet charges $39.

Credit card companies deserve to make a profit. But $39 for a late payment would wipe out that $25 bonus and then some. It just seems high. Why have late fees almost tripled in a decade? Inflation hasn't gone up that much.

So, no, I don't feel guilty about taking credit card company bonus money. They make the rules of the game, trying to entice you with sign up money and then getting you to carry a balance at 18%, 22%, even 25% interest. I'm just playing along, thank you very much.

Posted by brian at 11:40 AM | Comments (0)

May 08, 2006

Save two bucks every time you fill up

Gas rebate credit cards can save you two or three bucks per fill-up. That could mean hundreds of dollars in savings per year to drive your obnoxiously large, gas-guzzling SUV, even though you probably don't deserve it.

Three types of gas rebate credit cards are popular. All typically have no annual fee and offer a higher rebate on gasoline purchases (around 3-5%) than general cash back cards (only around 1%). One type is good for buying just gas at certain stations. This type of card is worthless since you can't use it to buy anything at any other store. (Well, you could use it to buy peanut butter-filled pretzels at the Chevron MiniMart, but that's about it). Unless you plan to have 20 different cards and a wallet as big as George Costanza's, skip this card.

The second type is a Visa or MasterCard offered by oil companies to use at certain stations. The Marathon MasterCard is a good example. It rebates 10% during the 60 day intro period and 5% after that but, again, trying to cut down on the George Costanza factor should be your goal.

The third type of card is a general credit card that offers gas rebates as part of a larger reward program. About 14 million pieces of direct mail for oil and gas cards were mailed just last year. I suspect this number is low, since one million of those pieces came to me. Since you're a loyal reader (thanks Mario!), I've sifted through all the offers so you can apply right now without thinking:

1. Blue Cash from American Express earns 5% cash back on gasoline (and supermarkets and drug stores) and 1.5% on everything else. You have to spend $6,500 for the year to earn these rates - until then, you'll earn only 1% on the gas. But, it comes with no annual fee, a 0% intro rate for 6 months, and according to the commercials, you'll be as cool as Robert DeNiro by having an AmEx card.

2. The Discover Gas Card comes with 0% intro rate for 12 months and 5% cash back on gas purchases, 1% cash back on everything else. I use this card because I like the picture of the beagle dog on the front.

3. Finally, it's a bit pretentious to call your credit card "perfect", but Chase isn't shy, and actually their PerfectCard is pretty sweet. No annual fee, 6% rebates on gas purchases for the first 90 days, then 3% rebate after that, 1% cash back on everything else, and a 0% intro APR.

Now inflate your tires to the correct pressure, don't drive too fast, and think about riding your bike to work once a week - you're too fat and you'll save money.

Posted by brian at 12:02 PM | Comments (1)

May 02, 2006

$500 signup bonus. Really.

TD Ameritrade is running a $500 signup promotion. Fund a new account with $10,000 and reach Apex status within three months. To do that, average five trades per month over three months (that is, 15 trades in three calendar months). To help you reach Apex status, you get 45 days of free online equity trades.

You have to keep the account open for nine months after the $500 credit posts. If the $10,000 earns 3.5% in Ameritrade's money market account and you use the free trades to buy & sell equities 15 times, you'll end up with about $10,850 after one year, or 8.5% nearly risk-free (assuming you don't lose money on the stock trades).

I use Ameritrade and like it since it's easy to transfer money in and out and their commissions are low. Plus, they've responded WAY faster than E*Trade when it comes to customer service (four hours vs. four days).

Please check out the details and fine print for yourself since your money will be tied up for a year. Also, don't forget that if you trade the same stock for three or more round trips in five business days, you are considered a day trader and must keep $25,000 minimum balance.

Ameritrade also offers a $100 signup bonus with a $5,000 opening balance, where you don't have to make any trades at all. You have to keep the account open for 9 months, which works out to a ~ 6.2% return, assuming you take advantage of the 3.5% money market account. That offer expires May 15.

Posted by brian at 09:57 PM | Comments (1)