Limbo: "a competitive dance in which the issuer bends backward and moves with marketing prowess under an interest rate level that is lowered after each successful program launch by a competitor".
This month Wachovia Bank (Atlanta) has taken the limbo bar just about as low as economically possible.
Effective October 12th, Wachovia is offering a 6.0% VISA or MasterCard with an annual fee of $18 for standard cards and $28 for gold cards. The interest rate is set at the prime rate (prime +0%) for the first year and then floats at prime +3.9%.
When you consider Wachovia also offers free balance transfers from other credit cards and treats cash advances the same as purchases, this new program is obviously one of the best deals to come down the pike for consumers this year.
By comparison if you are (by reason of insanity), still paying a 19.8% credit card interest rate with a $20 or so annual fee and you carry an average balance of $2,000, the new 6% Wachovia card will save you at least $250 in the next twelve months.
Unlike some other offers with single digit interest rates, the Wachovia's regular rate is still in the single digits.
For more information or an application call 1-800-842-3262.
The best example of a teaser rate is the new Unocal 76 VISA or MasterCard announced October 6th. Associates National Bank is issuing the Unocal card with an introductory rate of 7.6% for the first six months and then escalating to 17.9% (prime +11.9%) afterward. The card is free and offers a flat one percent rebate on all purchases but is hardly a bargain by any measure. Unocal and Associates is offering the new card to holders of the Unocal gasoline card and with take-one displays at Unocal service stations.
Other issuers passing under the limbo bar this month:
Central Carolina Bank (Durham, NC) unveiled an 8.5% VISA or MasterCard, October 3rd, with a $29 annual fee. The interest rate floats at prime +2.5% with an 8.0% floor. The annual fee is also waived for one year for cardholders applying before December 1st.
For more information call 1-800-577-1680 at any hour, day or night.
Citibank Choice (Towson, MD) is promoting a no-annual-fee VISA or MasterCard with a 6.9% interest rate this month. The rate is guaranteed until January 1, 1995 at which time it jumps to prime +9.4%. This is the best deal ever from the nation's largest issuer. For more information call 1-800-GO-CHOICE.
Will the limbo bar go any lower ?
If it does you can bet it's an illusion. It is impossible to produce a profit by charging cardholders interest rates under 6%. Issuers today are paying at least 3% for funds, writing off as much as 5% as losses and being forced competitively to spend more on customer service. Therefore smart consumers should examine super low interest rate offers very carefully, looking out for gimmicks like higher interest rates for cash advances or balance transfers, two cycle interest calculation methods, above average annual fees and high fees for cash advances or balance transfers.
Remember the time worn advice: if it sounds too good to be true, it probably is.
Here is one you may have trouble believing: a VISA Gold card for consumers with no credit history (or a poor credit history) and with a minimum qualifying income of just $15,000 per year.
Both VISA Gold and Gold MasterCards offer minimum credit lines of $5,000, generally require a $30,000 minimum annual income, and an excellent credit record.
How can you be worthy with half the income and a non-excellent credit history ?
Farrington Bank (Flanders, NJ) is now offering a secured VISA Gold to the not-so-creditworthy. If your weekly income is at least $300 and you have $5,000 to deposit in a collateral savings account you will probably qualify for a VISA Gold.
Farrington charges an A.P.R. of 17.5%, a $50.00 annual fee and pays 2.5% on the savings deposit. The bank also charges a one-time program fee of $55 and a $30 account set-up fee. For more information call 1-609-488-5606 between 9:30 A.M. and 4:30 P.M. eastern time.
Citibank (South Dakota) and First National Bank (Mattoon, IL) offer gold VISA and MasterCards on a secured basis. However both institutions will not consider applicants with previous credit problems including bankruptcy.
Two nationally available secured cards have been launched from Los Angeles.
California Commerce Bank is now offering the Banamex USA secured card with a 12% A.P.R. and an $80 annual fee. For information call 1-800-525-2640.
Los Angeles National Bank offers a secured MasterCard with an annual fee of $18 and an A.P.R. of 14.94%. For more information call 1-714-670-2400, extension 33.
AT&T Universal is taking customer service and support to a new level with the introduction of CardTIPS. The new service featuring a toll-free "infoLine" (1-800-554-TIPS) provides educational information on a wide variety of credit card related topics including how to guard yourself against credit card fraud, how to get a copy of your credit history and how to save money with your credit card.
Speaking of consumer education:
VISA U.S.A. has launched a major campaign to educate consumers about check cards (also known as debit cards). The campaign is called: "The New Shape of Checking" and will include visits to major metropolitan cities next year. Call For Action, Inc., a partner in the VISA project has produced a brochure outlining facts, rights and tips on the use of deposit access cards. For a complimentary copy call 1-800-647-1756.
MasterCard and Maestro U.S.A. released "The ATM Cash Card Quiz" to help consumers understand point-of- sale debit. The quiz was developed in partnership with the National Coalition for Consumer Education and is available free-of-charge by calling 1-800-999-5136. MasterCard is announcing the publication during October's National Consumer's Week.
Consumers will soon be entering the holiday shopping season and, unfortunately, consumers will also enter the season for the highest levels of credit card fraud. To assist consumers personally prevent fraud and in honor of National Consumer's Week, October 24-30, RAM Research Corporation is releasing a free pamphlet on holiday usage of bank credit cards. To receive a copy send a self-addressed, self-stamped envelope to: CardTrak's Holiday Tips, Box 1916, Frederick, Maryland 21702.
