One of the best cards in the country that just got better is the VISA and MasterCard issued by the Armed Forces Benefit Association Industrial Bank of Alexandria, Virginia. AFBA is now offering, as of August 16th, a special fixed interest rate of 8.9% through September of next year on its new: Superior Card. Afterwards the rate will vary with the prime rate (+6.00%) and will be subject to a 12.50% minimum rate and an 18.00% maximum rate. On top of this there is no annual fee and you have a fairly good chance of qualifying, unlike other super bargain cards.
A consumer with a $2,000 average balance and currently paying 16.50% would save more than $150 in interest charges over the next year and would continue to save nearly $100 per year in subsequent years. This does not include the annual fee savings if you are paying one now.
If, for some reason you do not qualify for AFBA's new Superior Card, the bank is also offering two other programs, both with below average pricing. The Excellent Card is 7.0% over prime (or 13.5%) with no annual fee and the Good Card floats at 9.0% above the prime rate with a $20 annual fee. Regardless of which one you qualify for AFBA will review your account upon renewal for a possible upgrade.
AFBA's multi-card program is typical of the trend in the industry today of tiering interest rates based on the applicant's credit risk. Incidentally AFBA's cards are available to the general public, nationally, without any strings attached.AFBA also offers a gold card with identical pricing.
For more information on the "bestest" AFBA cards call 1-800-776-2265.
Another program qualifying for the "bestest" category is the silver and gold MasterCards offered by Oak Brook Bank of Oak Brook, Illinois.
Announced July 20th, OBB is now offering an 8.9% (prime +2.9%) rate on both the standard and gold MasterCards. The annual fee is $39 for the standard or Silver MasterCard and $49 for the Gold MasterCard.
LikeAFBA's new card, the new OBB Silver Mastercard will save consumers a bundle on interest charges. However the high annual fee will wipe out most of the savings for cardholders with average balances under $1,500. In which case you should apply for Oak Brook's no annual fee Silver MasterCard with an 11.9% (prime +5.9%) rate or the no annual fee Gold MasterCard with a 12.9% (prime +6.9%) rate.
For more information on these other "bestest" cards from Oak Brook Bank call 1-800-536-3000.
To join the Club for one year you will have to cough up $49.50.
Clearly if you are in the market for great investment advice and are looking to switch to a lower rate gold card this could be money well spent. We should caution you that joining the Club will not automatically qualify you for this super bargain card. However Rukeyser is offering a full money back guarantee to disappointed members. For more information write to Box 25527, Alexandria, VA 22313.
The attraction to rebate cards continues to spread as most issuers are enjoying spectacular growth. For example the outstanding balances on the General Motors MasterCard grew 25% in the first six months of this year. The program, which celebrates its one year anniversary next month, now has four million cardholders.
Not to be left out of the rebate pack is the American Express Optima card. AmEx introduced Optima Rewards in April offering cardholders a choice of eighty different prizes. Cardholders earn one point for each dollar charged until April, 1995. Prize categories include dining, sports, getaways and entertainment.
Optima also offers the lowest interest rate of any major rebate program, 14.25% for new applicants and 12.25% for cardholders with good Optima payment records. However the card does carry a fee, unlike GM or GE. For Amex green or gold cardholders the fee is $15, for non-AmEx cardholders the annual fee is $25.
The major drawback for Optima is its limited acceptance, about one third of VISA and MasterCards.
How do the current rebate programs stack up to each other ?
Since the average cardholder charges about $2,000 per year let's take a look at what you would earn after a two year period with the major programs:
Ford/Citi VISA: a $200 credit towards a new Ford car or truck
GE Rewards MasterCard: $80 in coupons good at nearly 20 retailers including Macy's and K-Mart, plus hundreds of dollars in quarterly coupons (usually 20% off) from most of GE's 27 partners.
Dean Witter's Discover: a $20 cash rebate or thereabouts depending on how your annual charges were distributed over the two year period
American Express Optima: Choice of: (1) two dozen bagels with cream cheese and salmon from H&H Bagels of New York; (2) 6.5 gallon tin of popcorn from Great American Popcorn Works (3) one dozen long-stemmed roses from Superflora or (4) eight other prizes at the 3,000 point level (next level is 5,000 points).
Most airlines have teamed up with banks to offer VISA and MasterCards with air mileage programs. Usually one mile is earned for each dollar charged and the minimum travel award requires 5,000 miles. In the example above it would take 10 years or $20,000 worth of credit card purchases to accumulate enough points for a free coach ticket in the continental U.S..
Are rebate programs worth it ? YES and NO.
YES---if you have the commitment to shift all your purchases to the rebate card including groceries, gasoline, etc and the discipline to pay the balance off in full each month. AND if you can use the rebate.
NO---if you carry a high balance and make low payments. In this case you should look for a card with an interest rate under 13.00% and save some real cash which you can use to create your own reward.
According to RAM Research's mid-year portfolio analysis of the nation's top 300 issuers, consumers are charging about 10% more than last year but only adding a little more than 4% to outstanding debt. The details are available in the August issue of RAM Research's Bankcard Update. Call (301) 695-4660 for more information.
