Three Credit Card Updates and Heads Up

The Bank of Montreal has a new cash back World Elite MasterCard out that they’re promoting pretty heavily. The card has 1.75% cash back, which is pretty close to the best in the country.

I was all excited until I did 30 seconds of math. The rate and terms are pretty much the same as every other card, but it’s a $120 annual fee. So if you take $120 divided by 1.75, you need to charge just under $7,000 a year to only pay for the annual fee. That’s almost $600 a month before you even get a penny of actual cash back. So, unless you’re a huge charge and pay it in full every month, the card doesn’t make much sense for most people.

Did you take my advice two years ago and get a Capital One Platinum card if you regularly carry a balance? If so, you and I have been getting a rate of prime plus one percent all this time! A 4% credit card was something nobody else could match and would have saved you thousands of dollars in interest. But that’s come to an end. I just received their notice it’s changing to prime plus 7%, which makes it a 10% card. Still a good deal, but a 10 or 11 percent card is something you can get in a dozen others, including the Scotia Value Visa as an easily accessed one. Here’s the link to a federal government comparison site that’s really worth looking at: http://itools-ioutils.fcac-acfc.gc.ca/STCV-OSVC/ccst-oscc-eng.aspx   If you can’t grab the link, search for Financial Consumer Agency and then search on top for credit card selector tool. There are (right now) 26 cards at 12% or less and 12 cards under 11%.

When you get this, or any, rate changes on a credit card you have two options: Do nothing and take the rate increase. The second one is to call them and decline the change in the rate. If you do so, they’ll cut off your card for new charges, but you can take the forever plan to pay off your balance at the old rate, as long as you make the minimum payment. If you chose that, just make sure you get another card right away before this one shows a zero limit that will significantly drop your credit score!

Last week a relative was checking into a hotel in Prince George. The lady in front of him couldn’t get her credit card authorized. She had no idea why, and was quite rattled needing to get her daughter to find the cash. Here’s what you have to know if your card is a lower limit or near the maximum: Use your credit card at a gas station and they’ll put a $150 hold on your card. Even if you get $20 in gas, the hold comes off your available credit. Rent a car and they’ll typically put at least a $300 hold on it. Then, check into a hotel and they’ll typically do a $150 to $300 hold, depending on the hotel or how long you’re staying there. That’s even if you’ve prepaid through hotwire or priceline. Three stops and over $600 of your credit limits are used up for no reason and in the first hours of your trip! The block comes off usually in three to five days, but that’s a long time if you’re on holidays without a second card or the room on the one you’re relying on.

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