| NEW YORK
NEW YORK Jan 10 If your mailbox is stuffed, you
can probably blame the credit card industry. Credit card offers
are booming again, after a few quiet years of tighter credit.
John Ulzheimer, an independent credit expert and president
of consumer education at SmartCredit.com, offered advice on
finding the best credit card deals and how to make the most of
Q. What's the outlook for credit cards in 2013?
A. We will likely see more loosening of the purse strings
from credit card issuers now that they have fully absorbed the
Card Act, which somewhat restricts them from changing credit
card interest rates and adding new fees.
I expect issuers to go deeper into the credit scoring pool
to make offers for new cards, which is good news and bad news at
It's good for people who have had credit problems - either
because of the loss of a job or a bad mortgage - but (who) are
otherwise modest-to-low-risk borrowers. These are the people who
are able to get back into the game at low rates, but have been
otherwise frozen out.
The bad news is that people will have the ability to get
into more extensive debt again.
Q. What are the best credit card deals right now?
A. Free money is the best deal of all. You can get balance
transfer offers right now from every big issuer, including JP
Morgan Chase, Citibank and Capital
The best deals include a zero percent interest rate on
balance transfers, zero percent on new purchases and no balance
transfer fee. It's the trifecta.
Miles and point programs aren't any better than they've been
in the past, so these zero percent transfer offers are the new
apex rewards program. Cash-back deals aren't better either - 1
percent cash back is the norm, although some card issuers give
you a 2 percent or better kicker depending on where you use the
Q. Is 700 and above still the gold standard for credit
scores if you want the best credit cards?
A. You better be in the 700s, which sounds tough, but 50
percent of the population is already there. If you are below
700, a zero percent balance transfer offer is not in your
future. And if you are below 600, you should be concerned about
getting approved for anything. Issuers don't reward people with
bad credit just to help them.
Q. What interest rate should people expect to pay on their
A. If you have decent credit, the rate on your card should
be between 13 percent to 15 percent, which is terrible when you
talk about any other method of financing. No one in their right
mind would pay those kind of rates. But when it comes to credit
cards, that's the average rate to start off with.
If you have credit that's damaged, you'll find yourself
paying higher rates, likely in the 20 percent range. And if you
have stellar credit, your rates should be in range of 9.9 to
Of course, the only time the interest rate is relevant is
when you are carrying a balance.
The bottom line: Don't anchor yourself to the interest rate.
You are acquiescing to the idea of carrying balance.
Q. What credit cards do you carry?
A. My American Express card with the Delta
partnership has 14.5 percent rate, but it doesn't matter to me
because I don't pay interest on it in the first place. I have a
USAA cash-back credit card and use their bank. Everything I need
financially, I basically get through them because of their
Q. Do you carry any branded cards?
A. I have a Home Depot card. It's got a horribly high
interest rate. I did a kitchen renovation and bought cabinets,
so I got a really great deal by signing up for a card. Saving 10
percent off of $14,000 worth of cabinets is a lot better than
saving 10 percent off a pair of boots. But with 25 percent
interest rates, branded cards don't make much sense if you carry
a balance, even if you use all of those coupons you get for
being a loyal customer.
Q. Is there ever a reason to use a prepaid debit card?
A. These aren't credit cards. There's no underwriting, no
denial, no approval. It's like buying a gift card at the mall.
Pre-paid debit cards are a high-margin product, normally
very fee-intensive. Unlike other financial services products,
prepaid debt cards often have a celebrity attached such as Suze
Orman, A-Rod (Alex Rodriguez), Kimora Lee Simmons, Justin
Bieber. The list goes on and on.
While I'm very critical of prepaid debit cards, American
Express has a new prepaid Bluebird card with Walmart
that is an exception to that rule. It's a very competitive
product you can load for free at any Walmart location. There are
no fees associated with it, unless you are a heavy ATM user.
Other prepaid debt cards cannot make that claim.
Q. Where should I do the research to find the best cards?
A. A bunch of websites act as credit card strip malls.
Bankrate.com is very good. Bankrate.com also owns
CreditCards.com. Credit.com, where I used to work, has helpful
information. Some others worth a look include CreditSesame.com
and CreditKarma.com. I also like CardRatings.com because they
have good, detailed reviews of cards on their website.