Credit Card Debt Management

What does a credit card thief do when all the finer tricks of the trade have been uncovered? Invent new ones! Without condoning this line of income-making, you’ve got to give the thieves an “A” for creativity … or maybe not. It probably depends on whether you’ve ever been a victim of credit card theft.

Banks have become wise to the standard trick thieves pull as soon as they get a credit card. It might be small, random gas purchases or it might be a penny charge. These have been well-established as telltale signs of credit card theft, as it enables thieves to determine whether or not a card is still active. This is important because active credit cards sell for higher values on the black market, according to CNET News.

But now, thieves have upped their game. To determine whether a newly stolen card is still active, thieves have taken to making small charitable donations with the card. If it’s rejected, then they’ll know it’s going to sell for less on the black market. Banks and consumers, meanwhile, are less likely to pick up on the fraud quickly because charitable donations are quite normal. A consumer might assume a spouse made the donation and might not even find out about it until the thank you note arrives in the mail.

The best line of defense - sign up for identity theft protection and credit monitoring, or check your credit card statements yourself every week or so. This is easy enough to do, as most companies provide convenient online account access. A credit monitoring company is more thorough because it can spot when your name has been used to open accounts you didn’t even know existed. It’s important to be proactive in these matters because thieves won’t be “generous” for long. In no time, they’ll have a new set of golf clubs, a mani-pedi and tickets on a world-class cruise — all courtesy of you and your incredible “generosity.”

So it seems that some credit card companies may not be quite as generous as they once appeared to be. High annual fees and questionable marketing hooks have appeared alongside sudden, significant, and, consumer advocates say, unjustified interest rate hikes. The following news comes from Liz Moyer and Tatyana Shumsky of Forbes.com:

Bank of America gave a choice to thousands of cardholders this month - either pay off the card balances at the current 9% APR and quit using the cards or see an interest rate hike to 28%.

New Millenium Bank’s New Millenium card is a secured card with a higher-than-average $59 annual fee.

“Adding up the other costs to open an account, cardholders have to fork over $140 just to have access to money they put on deposit with the bank to back their spending on the card,” Forbes writes of the New Millenium card. “It’s basically like paying money for access to your money.”

HSBC, meanwhile, is marketing its American Dream card. At a 14.99% APR, cardholders can enter a glorified lottery with each and every purchase.

The long and short of it is that there are a lot of gimmicks out there - especially now. Don’t get caught up in the hype and glitz. Pay attention to the important basics of credit card offers - APR, annual fees, credit limits, secured vs. unsecured, etc. Rewards are not all they’re cracked up to be, and sometimes, neither are credit card companies in general.

Now, gassing up your SUV can actually be good for the environment — if you pay with the right credit card. Wait, maybe that’s not what environmental advocates exactly had in mind. There are a number of cards on the market now for eco-conscious consumers who want to make a difference? But is it a worthy cause or just a marketing ploy?

These cards are all about emission reduction and carbon offsetting, according to the Wall Street Journal. We’ve already discussed the GreenPay MasterCard, which focuses on carbon offsetting. GreenPay is joined by a couple others, like Bank of America’s Brighter Planet Visa (carbon offsetting) and GE’s Earth Rewards MasterCard (greenhouse gas emission reduction projects).

Interest rates vary, but Brighter Planet offers the lowest APR at 9.99%, WSJ reports. The cards’ rewards are relatively stingy in comparison to cash rewards, as in less than 2% for environmental causes versus 3% with cashback cards. The rewards are on par with most vanity cards offered by banks, with less than 2% going toward the organization of the cardholder’s choice. For various reasons, banks have been slow to embrace the environmental rewards cards.

Some critics say the offers are just a way for companies to make money off the guilty consciences of big-spenders. Profit is probably one motivator, but by offering the cards, companies can also align their actions with their expressions of environmental concern. The cards aren’t the only ones coming under some heat. There are plenty of critics of carbon offsetting as well, saying there is simply not enough transparency and oversight in the industry.

No matter your philosophy on carbon offsetting, greenhouse gas emissions, and those two ideals bringing profit to mega-corporations, the green rewards cards may just defy plain old common sense. Strictly running the numbers, you may be better off using a cash-back rewards card and donating your rewards to the non-profit of your choice.