Without a doubt the Ford card will look impressive on paper. But how does its performance stack up to other bargain cards readily available?
Since the card offers a 25 day grace period on purchases and charges no annual fee, the card is truly a bargain for 32% of the American cardholders who pay the purchase balance off, in full, each month. If you are among this minority and you charge several hundred dollars each month you may realize a net gain with Ford's rebate program. Furthermore the purchase protection and extended warranty programs are not available on most standard cards, even among those charging an annual fee.
The purchase rebate is structured to reward heavy users. Of annual purchases total up to less than $1,000 you will qualify for a 0.5% rebate. Exceeding $1,000 per year will earn you a higher percentage on the portion over certain threshold amounts. Cha rging between $1,000 and $2,000 will earn you a 0.75% rebate; between $2,000 and $3,000 a 1.0% rebate applies; over $3,000 will qualify you for a 1.5% rebate.
Translated this means if you charge less than $1,000 annually the rebate will be less than $5. If you charge between $1,000 and $2,000 you get a rebate under $12.50. Charge between $2,000 and $3,000 you'll earn $22.50 maximum. Exceeding $3,000 will inc rease the rebate by $15.00 per $1,000 charged.
The average cardholder charges approximately $2,200 per year. Under the Ford program the average cardholder would qualify for $14.50 rebate. By contrast, high rollers, charging $6,000 annually, would earn $67.50.
For most consumers the card is not a bargain.
Ford's interest rate is fixed at 15.90% till January 1st. Afterwards the rate will abruptly change to 19.80%. Since 68% of American cardholders carry an average daily balance of $1,626 and charge $2,200 annually, the annual costs, considering the rebate, for a typical Ford cardholder would be $308.
Compared to a major issuer charging a 19.80% A.P.R. and a $20 annual fee the Ford card will save consumers $34. However when compared with issuers charging 14% and no-annual-fee for the Ford Card costs $80 more per year.
Bottom line: If you faithfully pay-off the balance each month and do not take cash advances, the Ford card is for you. If you carry a balance you should look inside this newsletter for a better deal.
While Sears' has exploited a purchase rebate program to grow its Discover card, rebates are not popular with issuers of VISA and MasterCard. First Deposit Bank (NH) offers a no-annual-fee card with a rebate but the card is only available by solicitation. Corestates Bank (DE) offers a 1% rebate on its gold card but the program is limited to cardholders carrying balances. First American Bank (VA) offers the only national, publicly available standard card, with a rebate. First American's card is called the "One Percent VISA".
For more information call Ford 800-638-3679, Corestates 800-833-3010, or First American at 800-573-4004.
Over 50,000 consumers have discovered a gem of a credit card with the Armed Forces Benefit Association. The AFBA teamed up with Bank IV two years ago to offer a no-annual-fee affinity card with a variable rate (Prime +5%). You do not have to be a member of the association or a member of the armed forces to apply. Ant creditworthy consumer is eligible for the AFBA VISA and MasterCard.
The current interest rate if 13.50%. There is no fee and a full 25 day grace period is offered. This type of pricing is rarely seen on a publicly available affinity card.
Call the AFBA 800-776-2265, for more information. You can help yourself by lowering interest costs and you can indirectly support the association.
July marks the star of new fiscal quarter and a number of banks offering variables rates based on the Prime Rate (now 8.5%) have adjusted rates accordingly.
Most notably, the AT&T Universal Card now carries an 18.4% A.P.R. for new cardholders. The American Express Optima card also drops 0.5%. Optima cardholders carrying other American Express cards now pay a 15.75% A.P.R. while de-linked cardholders pay 16.25%.
Variable rates are not created equal. Some variable rates are structured higher than fixed rates.
Beware of issuers promoting a variable rate with a high floor and no ceiling. For example. First Consumer Bank (OR) is changing its variable rate structure to Prime +8.5% for the secured MasterCard. The catch is the floor rate or minimum A.P.R. is 20.50% and there is no ceiling. The modification goes into effect with the August billing cycle.
Look for more issuers to modify variable rate card with floor rates, especially if the Prime drops further. Most will be a little more reasonable though.
American Express announced two weeks ago a new card enhancement to reward frequent travelers. The program is called Membership Miles. To be eligible to redeem miles cardholders must earn at least 5,000 miles annually. The program will carry a $25 annual fee after the first year. Participating airlines include Continental, Pan Am, Midway, MGM Grand Air, Delta, Northwest and Southwest airlines.
American Express also introduced another card enhancement to cover lemons (products, not produce). If you purchase an item and it breaks down twice American Express will replace it. To qualify you must purchase the item with your American Express card, the item must carry a warranty and it must be repaired once under warranty. Unfortunately, automobiles are excluded.
Card Issuers are offering more fee-based benefits. In the past two months AT&T has offered Universal cardholders two new services: Roadside Assistance and Wallet Security. Roadside Assistance carries an $18 annual fee. Wallet Security provides cardholders with credit card registration and personal property/document registration at an annual charge of $15. Ford Motor Company is also offering a roadside assistance program on its new card for $15 per year.
Consumer looking for extended benefits should consider VISA Gold and Gold MasterCards. Nearly all the programs now offered for a fee on standard cards, are available on all gold cards. Several gold cards carry no annual fee.
