Low Interest Cards With No Transfer Fee

Gattuso: A swipe at consumers

Do not look now, but the rewards program for debit card could soon disappear.

Thank you to a new regulation from Washington, the banks across the country are limiting or ending their benefits to cardholders. In the past week, JP Morgan Chase, Wells Fargo and SunTrust announced they will no longer be offering rewards to some or all customers.

More are expected to follow suit.

The cause of this crisis is a provision little known back in the bill last year Frank-Dodd Financial Regulation. Sponsored by Senator Dick Durbin, D-Ill., A provision that requires the Fed to limit the cost of banks may charge retailers for debit card transaction processing.

These fees known as "exchange" or "slip" fees vary widely, but averages about 44 cents per transaction, or 1.14 percent of total purchases. Overall, the costs of generating about 14 billion for the banks that issue debit cards.

In recent years, debit cards have become more popular with consumers, retailers have loudly complained about the cost of these fees. Durbin amendment was an attempt to address these complaints.

Specifically, the Federal Reserve is responsible for setting limits on these rights to ensure they are "reasonable" and proportionate to the cost. After a cursory review of the market, the Fed has proposed to cap interchange fees at a flat 12 cents per transaction, barely a quarter of the current rate.

Initially, the cap on interchange fees may have been perceived as an easy way to score political points. In the wake of the 2008 rescue operations, major banks were lepers, so why not transfer some money from them to help local retailers? But now it seems that consumers will lose.

And it's not just reward programs that are at risk. Debit cards may be harder to obtain, thus depriving consumers of any one of the most beneficial innovations of personal finance in recent years. The cap bank charges and other new regulation has also led banks to increase fees on other services, from ATMs to check accounts, to offset the lost revenue.

The net effect will not only make the bank more expensive, but the cause of many low-income Americans to file their bank accounts full.Jamie Dimon, CEO of JPMorgan Chase, the projects not less than 5 percent of consumers stop their accounts to become "unbanked." No organization request such as the NAACP have joined industry groups to sound the alarm.

Are Low Interest Credit Cards Really a Good Deal? » interest credit

You just got an offer in the mail for a low-interest credit card. That sounds great, right? Interest charges make debt pile up faster, so you’re inclined to jump on this credit offer right away.

Hold your horses, friend. Before you take the credit card company up on its offer, there are some things you need to know about low interest credit cards. They’re not all created equal, and even the phrase “low interest” can mean something very different depending on the company – or the type of charge.

When you get an offer for a credit card – any credit card – you should read the fine print before making a decision. Many companies will try and lure you in with offers of very low interest rates, or even no interest. But these rates don’t last forever. If you check out the card’s terms and conditions, you will almost always find that the really low interest rates are just part of an “introductory” period. These can last as little as three months or as long as fifteen, with six to twelve months being standard.

If you have some important purchases coming up, or if you want to transfer your debt from a high-interest card, then a low- or no-interest credit card could be a good choice for you. Pay off the balance in full before the introductory phase ends to take full advantage of the reduced rates.

Also check out the fine print to see which types of charges the low interest applies to. You might be paying 8% interest on purchases, but cash advances can spike that rate to 20% or higher. Balance transfers and over-the-limit purchases are also subject to higher interest rates. If you incur these types of charges very often, you’re better off with an average interest credit card that charges the same amount for cash advances as for purchases.

While you’re reading through the card’s terms and conditions, check out the policy on universal default. If the company participates in universal default, you should look elsewhere for your next card. Universal default means that any time you’re late on payments, your interest rate can be increased. And that increase isn’t just for late credit card payments. Your late utility bill or late car payment could affect the interest rate on your credit card. It’s best to avoid universal default.

Another factor to consider is the card’s grace period. A grace period is the amount of time you have between making a purchase and having that purchase start to accrue interest. The average length of a grace period is about 22 days, but some cards don’t even offer one anymore. Look for one that does.