A FEW WORDS BEFORE THE RISKY CARDS TOPIC
Although this final post in the five-part series is about risky cash reward cards and their qualities, I would first like to review the rating system itself. Then this post will get into the details of risky cash reward credit cards and qualities.
CASH REWARD CREDIT CARD RATINGS REVIEW
To make the most of cash reward credit cards, it is important to know about the qualities of any cash reward credit card before obtaining or using it. This is because not all cash reward credit cards have the same qualities. Therefore, when you know the qualities, you know how to plan for the most benefits from it and how to avoid the least of them. Let me explain how this works by reviewing the traffic signal system I developed.
THE TRAFFIC SIGNAL SYSTEM FOR CASH REWARD CREDIT CARDS AND QUALITIES
Cash Reward credit cards can be divided into three quality categories similar to a traffic signal:
GREEN LIGHT credit card cash reward cards are detailed in the blog post Cash Reward Credit Cards Considerations (June 2019).
YELLOW LIGHT cash reward cards are detailed in the blog post, Cash Reward Credit Card Cautions (June 2019).
RED LIGHT cash reward cards and qualities are detailed in this blog post. It is about qualities to avoid or even cards with severe drawbacks. If possible, avoid the card limitations but not the card completely if it has redeeming qualities. As the saying goes, ‘don’t throw the baby out with the bathwater’. Sometimes, I find this does apply to cards that have qualities in the RED LIGHT quality category. Thus, here are some situations where this has proven to be the case.
RISKY RATED: PROCEED WITH GREAT CAUTION OR NOT AT ALL
This post, Part Five of The Credit Card Rating System reveals risky cash reward cards that can present some rather challenging situations. In such cases, I would either pass or proceed with great caution. Anyway, there are several reasons people do acquire such cards:
1. less than stellar credit score which makes better quality cards unavailable
2. lack of knowledge about better quality cards
3. need for any financial benefit at the given time
USE ONLY WITH THE GUIDANCE OF A RELIABLE RATING SYSTEM
As mentioned in Part 4, there are many cash rewards credit cards that require caution when using because of the mixed qualities they possess. I also mentioned that in order to manage all types of cards, I had to set up a system for rating cash reward credit cards.
My system helps determine what degree of cautious awareness is required to use such a card and/or qualities safely. Along these lines, I have reserved this post about risky cash reward cards to focus on what card(s) comprise the riskiest qualities to use. In other words, this post is about the ‘Red Light’ Cash Reward Credit Cards qualities and cards that possess them. These can be the least desirable cards to have.
RED LIGHT CREDIT CARD CASH REWARD CHARACTERISTICS TO AVOID
The following information is based upon my own experience and is not necessarily documented research facts. Where it is a fact, a source will be sited.
The CARECREDIT® REWARDS MASTERCARD
For instance, the new CareCredit® Rewards MasterCard has some unusual perks. There are categories in which one can receive 2% cash back. They include medical practitioner charges, drug store charges, and some other unique categories for this rate. But there is a serious limitation in cash reward delivery.
LONG DELAY TO RECEIVE CASH REWARDS
This illustration of a long delay to receive a cash reward is a story about The Care Credit Rewards Card. Promotional signup bonus availability does take the amount of time clearly stated in the application, after 90 days.
On the other hand, cash rewards for the most desirable credit cards take simply a matter of days. Here’s where you can get stopped by a red light. It is also where you may have to weigh whether or not the positive considerations outweigh the qualities to avoid.
Read the CARECREDIT® REWARDS™ MASTERCARD®REWARDS PROGRAM TERMS (“Terms”) to learn just what this means. If you can’t find the answer, call the phone number provided. Are you getting frustrated, yet? If not, you will be.
When you call, you have to:
1. be specific about asking for the redemption of your cash rewards, in increments of $10
2. verify your information with the customer service representative
3. clearly state, ‘I want to redeem my cash rewards, now’
4. find out when you can expect your cash reward
5. write down every detail each time a call is placed to them about this
The immediate result is the following. It takes one to two billing cycles after calling to request your cash rewards. The number of months delay depends upon what date in relation to the statement date the request is made. Now, are you totally confused as well? I was.
LONG WAIT FOR PROMOTIONAL SIGNUP BONUS TO BE AVAILABLE
In some cases, I have spent the minimum needed to qualify for a promotional bonus in less than the time provided. Some cards will pay me the bonus early. On the other hand, some won’t. It is clear which is preferable. Find out the quality related to this. It is important to know how long the wait is.
CITIBANK N.A. SPONSORED CARDSIn addition to VISA, MASTERCARD, AMEX, and DISCOVER CARD, there is a variety of bank-sponsored credit cards such as Citibank N.A., Synchrony Bank, TD Bank, and Comenity. In my experience, Citibank N.A. cards can be problematic. For example, I constantly have trouble logging into my accounts. These include Staples | More Account, and The Home Depot. In addition, one of my accounts was closed without warning due to lack of use. Most credit card companies will write at least once, if not more to notify a customer about an impending closing. To say the least, this is a nuisance if not a real inconvenience.
OTHER QUALITIES AND CARDS TO AVOID OR USE AT YOUR OWN RISK
LOW PROMOTION SIGNUP BONUS
There have been times when I really needed a promotional bonus to help pay some bills even if it was only $100. It is not always possible to get the best card with double that rate. Therefore, compromise comes into the picture. Because it’s been quite a while since I needed to signup for one of these cards, I am not sure which they are. But you will find out when you see their offer.
LONG WAIT FOR PROMOTIONAL SIGNUP BONUS TO BE AVAILABLE
In some cases, I have spent the minimum needed to qualify for a promotional bonus in less than the time provided. Some cards will pay me the bonus early. On the other hand, some won’t. It is clear which is preferable. Find out the quality related to this. It is important to know how long the wait is. As mentioned, CareCard Rewards MC is such a card.
$50 MINIMUM IN CASH REWARDS BEFORE DISTRIBUTION IS AVAILABLE
Barclay Bank MasterCard®. There are so many other cards that offer cashback so much quicker. One really needs to question why to bother with this one. Unless this card is used to charge all one’s expenses, it does not make sense to use it. In addition, 1.5% is not such an attractive rate anyway. In my opinion, this is one of those cards to sign up for when you just really need the $100. promotional signup bonuses.
NO CASHBACK OR 1% CASH BACK
There are so many cash reward cards with enticing deals that there should be no reason to acquire a card that offers no cashback or only 1% back. Unless there is a good reason, stick to this. Here’s one exception.
When we went to The Home Depot to make some purchases. We got a $25 promotional signup bonus. That paid for what we bought. But after that, the card has sat gathering dust. We have to make a purchase on it or our credit limit will go up at the beginning of next month. At least they wrote to let us know. On the plus side, there are some good promotions on large purchases and time to pay them off.
UNAFFORDABLE HIGH ANNUAL FEES
Some Chase Cards have very high annual fees. But keep in mind that if you can afford it, the benefits can be commensurate with such a fee. But if money for such a fee is not saved and readily available, it can be a disaster.
CANCELLATION OF CARD WITHOUT WARNING FOR LACK OF USEWe had a Best Buy Credit Card issued by Citibank®. We failed to use it within the given time required. But we received no communication from them notifying us that our card would be closed if we did not use it within the given amount of time. To my knowledge, at least one or more letters are required before an account is closed. Shame on you Citibank.
LIMITED ‘LIVE’ HOURS TO REACH THE BANKThis can often be a problem with store credit cards and smaller bank credit card companies rather than large banks. Their hours of in-person availability tend to coincide with regular business hours, 9am-5pm or maybe 8am-8pm. But they are not 24/7.
As you can see, there are not always very clear distinctions when it comes to choosing a cash rewards card. Some things may work in your favor while some may not. In addition, ratings and credit card consideration details can change over time. It is best to check the most recent information posted about each credit card. Don’t be afraid to ask questions. Keep asking questions until you get the right answer. Reread this blog post series as well.
Here are the links to this five-part series about my Credit Card Rating System:
Introduction to A Credit Card Rating System
The Rating System Used for Cash Back Credit Cards (Series Part 2 – June 2019)
Excellent Cash Reward Cards (Part 3 – June 2019)
Mixed Cash Reward Credit Card Benefits (Part 4 – June 2019)
Risky Cash Reward Credit Cards (Part 5-June 2019)
Please note: I am not a certified financial planner or professional advisor. These blog posts about the use of credit cards are based on my own experience which I freely share. But I can take no legal or financial responsibility for the results you may have in attempting to follow my system. But I do wish you the best and welcome your questions on the comments at the very end of this post.
SOURCES & RESOURCES
Compare Cards: Best Cards for Cash Back
Nerd Wallet | Credit Cards Market Place
How Cash Back Credit Cards Work
Best and Worst Store Credit Cards