This offer is expired.

This offer is expired.

Expedia.com has revamped their in-house loyalty rewards program. Citi and Expedia have partnered on a new set of co-branded credit cards.

From 2005 to 2007, a peek at my credit report might have revealed that I had over $30,000 in credit card debt. The good news is that I borrowed it at 0% APR and then immediately stashed it in an FDIC-insured bank account earning 6% interest at times. Just recently, a US presidential candidate disclosed an “up to $15k” credit card balance at 27% APR, which prompted Quoctrong Bui of NPR Planet Money to research how interest rates on credit cards have changed over time. I converted the interactive chart into an animated picture which cycles you from 2001 to 2013:

There’s also a chart showing the percentage of cardholders who pay off their balance in any given month, based on their FICO score.

Some observations:

The rise of 0% APR interest rates. In 2001, nobody was getting 0% APR interest rates. In 2004, there was a huge spike and that was basically “Peak 0% APR”. Since then, 0% rates have stayed around, gradually decreasing in popularity, until 2013 when there was again a slight uptick.

This doesn’t account for the changing length of 0% APR promotional periods. In 2005, there were a lot of 0% APR offers but they were usually for 6 to 12 months. As overall interest rates have remained very low across the board, there aren’t quite as many 0% APR offers available, but the best ones are for longer terms – up to 24 months.

Right now, you can get 0% APR for 15 months with no balance transfer fee, or 0% APR at 21 months with a balance transfer fee.

The big difference between the average cardholder with a 700 FICO and a 800 FICO score. I’ve always felt that anything above roughly 700 to 740 FICO was a “good enough” score with which I was rarely, if ever, denied credit. From the second chart above, you can flip the numbers to state that:

• 77% of folks with a 700 FICO carry a balance each month.
• 64% of folks with a 740 FICO carry a balance each month.
• 27% of folks with a 800 FICO carry a balance each month.

On the other hand, even 27% is higher than I though it would be. A lot of people with “good” and even “excellent” credit carry balances each month.

How many people are carrying balances after the 0% introductory period ends? Obviously, there is a reason that 0% APR offers are still around. But that reason isn’t completely explained above. Does 0% APR encourage “new” debt from people who wouldn’t otherwise carry a balance? For example, is it possible to look at 6 or 12 months after the 0% intro period ends, and see if that marks an increase in balances? Or are 0% APRs mainly a tactic to attract balances already held at other card companies?

If you DO pay your balances in full, you can still reap the benefits of your good credit score without paying interest. It’s now been a while since I was earning thousands of dollars in “free money” from 0% balance transfers. But the silver lining is that back in 2007 a “good” sign-up bonus was $100 while nowadays you can easily find credit card bonuses with $500 value. I would say it is even less work to manage a few new cards a year vs. juggling 0% balance transfers which required making last-minute payments to maximize interest earned, and thus worrying about missing a payment deadline.

A quick smartphone snapshot of credit cards in my wallet shows well over $2,000 of accrued bonus value – 2 free nights at any Hilton hotel for which I got over $1,000 value, $800 in American Airlines airfare (separate $500 in airfare credits offset the annual fee), 40,000 Ultimate Rewards points good for $500 in travel, and 40,000 American miles (former US Airways card). This is addition to any cash back/miles/points for purchases, free checked bags, or extended warranty perks.

Our partner Citi has launched yet another new card, AT&T Access More MasterCard® from Citi. This AT&T co-branded card obviously targets a niche, but read on if you will be in the market for a new GSM phone in the next year ($650 is the full price of a new iPhone 6). As such, this card took a little extra research and analysis. Be sure to read all the details before applying, so you understand how to get everything possible out of this offer.

“Exclusive New Phone Offer” details. Yes, the offer screams “new phone”! But lots of ads say that. What kind of new phone? Does it include iPhone 6 or Samsung Galaxy S6? What strings are attached? Do I need to sign a contract?

• You must spend $2,000 in purchases with your AT&T Access More Card within 3 months of account opening. As with other sign-up bonuses, this is the spending hurdle. The application page also says “If you buy a new phone now it will count toward the $2,000 in qualifying purchases!”. At first, I read this to mean “buy a phone and you don’t need to spend $2,000 anymore”. Nope. It’s just reminding you that if, for example, you buy a $650 phone on this card, then you’ll only need to spend another $1,350 on the card to meet the $2,000 threshold.
• You can get any new phone on the AT&T website. Apple iPhone 6, iPhone 6 Plus, Samsung S6, Samsung S6 Edge, flip phone, whatever.
• They’ll give you up to $650 back towards a new phone bought full price with no annual contract… At first this may seem like a negative, man I have to buy it at full price? But that’s actually a good thing when the credit is for up to $650! For example, an iPhone 6 starts at $649.99 and Samsung S6 starts at $684.99. (Taxes, shipping, fees, and wireless service not included.)
• … which also means lower monthly bills! When you essentially bring your own device (BYOD) buy buying the phone outright, AT&T will give you lower bills in the form of $15 to $25 off each month on their Mobile Share Value plans. Also, the $40 per-line activation fee is waived when you buy the phone at full price (and is not waived for 2-year contracts). More details on this below.
• Since you own the phone and are not on a contract, you can also unlock it for use on any carrier. You can find unlock instructions at att.com/deviceunlock. are the AT&T unlock instructions [pdf]. Postpaid customers have an active account for at least 60 days, with no past due or unpaid balance. Non-AT&T customers can request a phone unlock before activating the phone on an AT&T plan. After submitting your request, the unlock should be done within 48 hours.
• You must buy the phone using their special link. After you buy the phone, then activate it on an AT&T monthly plans of you choice for at least 15 days. Remember, you’re not bound to a contract after that. It’s easier just to quote from their Terms and Conditions:
  

  You must purchase an eligible phone from AT&T with your AT&T Access More Credit Card from Citi (the “Card”) using the Phone Offer Link created individually for you. This link may be accessible to you in several locations including, but not limited to, your approval screen at the time you apply, an email welcoming you to Access More Card membership (if you provide a valid email address) and through your Online Account at citi.com/att. You may redeem the Phone Offer using the link at any time after your Card account opening. Once you have made $2,000 in purchases within the first 3 months of your Card account opening, and purchased and activated your eligible phone, Citi will credit your account for the cost of the eligible phone you purchased up to $650 (exclusive of taxes, fees, shipping and wireless service) within 1 to 2 billing cycles. If you choose to purchase an eligible phone which costs more or less than $650, your credit will equal the cost of the phone or $650, whichever is less.

Side question: How does paying full price for a phone compare with the subsidized 2-year contract or the AT&T Next plan? Most people don’t pay full price for a phone. It’s a lot of money. AT&T Next is basically like agreeing to pay full price for a phone but they let you pay in monthly installments instead. So the $650 iPhone 6 would $21.67 for 30 months (multiply that out and you get $650.10.) Nothing really special there. The traditional alternative is that you get a subsidized phone but you enter a 2-year contract at a higher monthly bill. Here’s how the two options compare:

• The phone subsidy with a 2-year contract is $450, but you have a $40 activation fee. So the $650 iPhone 6 would only cost $200, plus a $40 per-line activation fee.
• The monthly bill subsidy with a full price phone adds up to either $360 or $640 over 2 years. With the full price phone, there is no activation fee. If your Mobile Share Value plan comes with 6GB of data or less, you get a $15 discount per month per line. $15 times 24 months = $360. If your Mobile Share Value plan comes with 10GB or more, you get a $25 discount per month per line. $25 times 24 months = $600.

So if you compare the savings between the full price plan as 2-year contract, you’re either behind by $50 over two years, or ahead by $190 over two years. So worst case you’re behind by $50 at the 2-year mark, but if you kept your full price phone and cheaper-by-$15 plan for just an extra 4 months past the contract end date, you’d be ahead again.

Ongoing card rewards program highlights. This card also has a unique rewards program using Citi ThankYou points:

• 3 ThankYou Points for every $1 you spend on purchases made online at retail and travel websites*
• 3 ThankYou Points for every $1 you spend on products and services purchased directly from AT&T*
• 1 point earned for every $1 you spend on other purchases*
• 10,000 Anniversary bonus points after you spend $10,000 in prior cardmembership year*
• $95 annual fee.

Here are snippets from the fine print that I think are helpful:

Retail websites are websites that sell goods directly to the consumer through an online website and include department store websites, specialty store websites, warehouse store websites and boutique websites. Travel websites are websites that allow you to book travel and include online travel agencies, hotel websites and airline websites.

AT&T purchases are AT&T consumer products and/or services purchased directly from AT&T. AT&T consumer products and services must be purchased from www.att.com, www.telephones.att.com, AT&T owned stores or AT&T customer service centers. Purchases from independent wireless dealers or AT&T resellers are not eligible, unless they are for payment of AT&T service.

That means you can get 3 ThankYou points per $1 of purchases at Amazon.com, Costco.com, Apple.com, Walmart.com, Target.com, Expedia.com, and so on as well at your AT&T monthly service bill. Please see my Citi ThankYou Premier card review for details on redeeming your ThankYou points for at least $100 value per 10,000 points, but note that the special 25% bonus on travel redemption only apply if you also hold the ThankYou Premier card (you can redeem points earned from this card). Throw in the even-more special American Airlines flight awards from the Citi Prestige card and those 3X ThankYou categories start looking even better.

Bottom line. This is a niche card for folks that will soon be in the market for a new GSM phone, especially AT&T customers. (Non-AT&T customers can request a phone unlock before activating the phone on an AT&T plan, after which you’ll have an unlocked GSM phone that can be used on another GSM carrier. Afterward, you’ll still need to activate an AT&T plan for 15 days to get the credit.) If that’s you, then the sign-up bonus is very generous – up to $650 towards a full-price, no-contract AT&T GSM phone. Looking at all the scenarios above, even in the worst case you’d be behind $50 after two years vs. buying new AT&T phone via 2-year contract. There is also the $95 annual fee. That’s still a net benefit of over $500 and thus one of the top credit card sign-up bonuses currently available. The card then offers you ongoing bonus rewards on AT&T service as well as an interestingly broad category of “retail websites”. However, that $95 annual fee is rather high unless you spend $10,000 annually on the card and get the 10,000 ThankYou point anniversary bonus to offset it.

“Disclaimer: This content is not provided or commissioned by the issuer. Opinions expressed here are author’s alone, not those of the issuer, and have not been reviewed, approved or otherwise endorsed by the issuer. This site may be compensated through the issuer’s Affiliate Program.”

The sales pitch for American Express has always been that their cardholders are wealthy and thus big spenders, which in turn justifies their above-average transaction fees charged to merchants. The theory is a merchant won’t mind paying more in fees if it is offset by higher average receipts (and thus profits). This is why Tiffany & Co takes AmEx and my favorite Indian food truck does not.

However, this recent Bloomberg article suggests that American Express is losing their millionaires because they are actually doing the math on their credit card rewards and finding the perks are better elsewhere. The title in the Businessweek magazine version is “Even Millionaires Count Their Miles“. To which I say, of course they do!

As less-affluent consumers cut spending during the recession and a 2009 law known as the CARD Act limited lenders’ ability to raise interest rates and charge late fees, banks revved up their pursuit of customers with top credit scores who pay their bills on time.

The article quotes hedge fund manager Whitney Tilson, who switched from using American Express for 30 years over to the new Barclaycard Arrival Plus World Elite MasterCard (my review). He states:

The difference between getting 1 percent and 2 percent cash back is thousands of dollars and for that amount of money, Barclaycard has a better offer […]

(I should mention that Tilson is well-known as a disciple of the Graham-Dodd-Buffett-Munger school of value investing. You would think value investors would know a good deal. 🙂 Of course, you could also flip that as the largest shareholder of American Express is… Berkshire Hathaway.)

The problem is that the American Express Platinum used to be “the” card for affluent travelers because it got you into any of the airport lounges from all major carriers. But now if you want access to all American lounges, you need the premium Citi co-branded credit card. To get access to United lounges, you need the premium co-branded Chase card. And so on. AmEx even started building their own airport lounges, but so far there are only four of them. Nowadays, unless you redeem Membership Rewards for frequent flier miles and use them wisely, it is hard to get even 1 cent of cash for 1 MR point these days. Even a plain-vanilla rewards card will pay you 1% cash back and more importantly their direct competitor Chase Ultimate Rewards will get you 1 cent back or 1.25 cents towards travel.

Here’s the Bloomberg graphic of credit cards that cater to “affluent consumers”:

I want to point out that the graphic is misleading because the AmEx gives a $200 travel credit every year while the Barclaycard $400 statement credit is one-time only. I do agree the Barclaycard at 2.2% back towards travel is good if you have travel charges that you redeem against, and the $400 upfront bonus counters the $89 annual fee.

Not mentioned in the article are two cards that I think are solid no-brainer cards for anyone. Both earn double the cash back from ordinary 1% cards and have no annual fee. Unless you are redeeming frequent flier miles for business class tickets or hotel points for luxury stays (which I try to do with part of my credit card rewards), it is unlikely you are getting more than 2 cents a point.

• Citi® Double Cash Card Review
• Fidelity Investment Rewards American Express Card Review

If you charged $100,000 a year, getting 2% instead of 1% would be an extra $1,000 a year back. Even if you charged $10,000 a year, that is an extra 100 bucks. You don’t need to be wealthy to appreciate simple cold, hard cash. Because there is no annual fee, I think everyone, including millionaires, should have one of these in their wallet.