Who Should Get A Black Card? Probably Not You!

Visa Black Card CommercialThere once was a time I was rich, but never famous as I traveled internationally four times a year for business. Each destination hosted loads of other folks who wanted to learn about the next money making idea in the global financial markets. With me was an American Express corporate card where I could expense relatively freely to the tune of ~$50,000 a year. The card provided travel insurance, access to airport lounges, concierge services, and more. 50K may sound like a lot, but that’s nothing compared to the hundreds of thousands in expenses I hear from some Black Card spenders!

I don’t have much coming in anymore, but I do have a lot of freedom. It’s a tradeoff many will take at some point in their lives. Given my desire to simplify things, I’ve only got one personal credit card, which is the Barclaycard Arrival World MasterCard with no annual fee. There’s no annual fee and all my spending is concentrated here to maximize my rewards points.

Since we live in the land of consumerism where we want things and we want them now, I thought it’d be a good idea to do a post for all you Black Card aspirees out there. Some get Black Cards just for its status symbol. Meanwhile, other people are a little less vain and use their Black Card for better access and service. Whatever the case, I’d like to introduce my guidelines for those who can and should not get a Black Card.

SHOULD YOU GET A BLACK CARD? LET’S SEE IF YOU QUALIFY

How To Get The Lowest Price Guarantee: The Citi® Price Rewind Program

Tiffany's BoxI’ve been purposefully avoiding the topic of spending given the bombardment about holiday shopping. Buying things we don’t need is not exactly a path to building wealth. What’s more, I dislike buying things only to see them drop in price soon after. It makes me feel like a dummy!

That said, I’ve got needs too baby! Thankfully, my one and only rewards credit card just got a little better. I’ve been a Citi ThankYou® Preferred Rewards Card user for the past eight years because of their comprehensive rewards program. Everything is linked up to my online account where points accrue like clockwork every month. My goal is to focus as many accounts and assets with one bank as possible to maximize the benefits.

Just in time for the shopping season, I got an e-mail from Citibank highlighting their new Citi® Price Rewind Program. I’ve been waiting for such a program for a while now. When you shop with your Citi ThankYou® Card, simply register your purchase and Citi will search retailers for a lower price for 30 days after your purchase date. If the price drops more than $25 in that time, you’ll be notified by email that you’re eligible to receive a refund!

The theme is, “You do the shopping, Citi® Price Rewind does the shopping around.” Smart!

Everybody wants the lowest price possible, but seldom do people spend enough time searching. When I see something I like that’s priced fair enough, I make a purchase. I can’t be bothered with spending more than 10 minutes trying to save $25 bucks even though I feel stupid when I see a price drop after. By registering my purchase, I don’t have to search anymore.

MY POTENTIAL HOLIDAY SHOPPING LIST AND SAVINGS EXAMPLE

Don’t Let A Credit Card Rewards Program Change Your Spending Habits

Nike Air Trainer I

The retro Nike Air Trainer 1 for $110. Tempting to buy with my credit card!

I used to receive a ton of credit card solicitations in the mail until I finally put my address on the do not spam list. Some of the offers really tried to suck people in, such as 6% cash back on groceries, or 3% on gas. Gas and groceries are the two unavoidable expenses for almost everyone and it is brilliant for credit card companies to target these two items.

Even though I have a small monthly grocery bill and only drive about 6,500 miles a year, I was tempted to sign up. The “spend more save more” mentality started taking hold! Then I read the fine print about the 29.99% APR, the limitation on how much I could get back, and the late penalty fee and decided not to sign up. The rewards program didn’t match my lifestyle.

If you are a family of five who spends $1,000+ a month on grocery and commutes 50 miles to work everyday, you probably will benefit the most from a 6% cash back on groceries/3% on gas rewards credit card vs. a city dweller like me with no dependents. You just have to look at the fine print and see what the COSTS are associated with the card.

THE BIGGEST DANGERS OF A REWARDS CREDIT CARD

Will A Late Credit Card Payment Hurt My Credit Score?

Running Late In Traffic

There’s Always An Excuse For Being Late!

I was so rushed to pack for Europe that I forgot to schedule my normal credit card payment for the first of the month! As a result, I missed my $535 credit card bill completely and didn’t realize it until three days after due date!

The first thing to realize is it’s not the end of the world if you accidentally miss a credit card payment. Things like this happen all the time, and the hammer does not fall on your credit score so quickly.

The second thing is there’s a grace period to how late you can be before getting hurt. Being three days late is much different from being 30 days late. But being 90+ days late is a disaster!

The final thing is credit card companies want to make money off you. Paying late or not in full every month makes them an estimated $60 billion+ a year! If credit card companies knew you would never default, they’d happily let you pay late all the time!

TWO STRATEGIES FOR HELPING WAIVE LATE PAYMENT FEES

The Best Rewards Credit Card Is The Citi ThankYou® Card

Citi ThankYou Rewards Credit CardThe main reason I opened a relationship with Citibank in 2001 was because they are an international bank with good customer service. I use to travel overseas twice a year for my job and wanted to access a Citibank branch wherever I went. Chase couldn’t do that at the time, neither could Bank of America, Wells Fargo, Bank of The West, and frankly most banks.

When my Citibank ATM card was stolen in Beijing back in 2003, I was able to get another card sent to my hotel room two days later with all erroneous charges expunged. I’ve got a whole story to tell about this incident, which I’ll save for another post. It was then that I knew I would be a Citibank customer for life.

My Citi ThankYou® Preferred credit card is my main personal credit card. I try and put everything on the card because of the rewards points and the clear monthly consolidated spending statement. The goal is to easily track my expenses and maximize my rewards points.

THE BEST REWARDS PROGRAM

The Irresponsibility Of Borrowing Money To Borrow More Money

Swans With Their Babies In San FranciscoIf you want to know what’s wrong with people’s personal finances, just observe those who are willing to borrow money in order to borrow more money!  One example is using a credit card you can’t pay off in full each month, for a downpayment on a car.  Since the limit for credit card use for buying at the car dealership is usually $3,000, and given most downpayments on vehicles range from $0 to $3,000 to buy or lease, using the credit card is a tantalizing proposition.

Forget the fact that these car buyers don’t make 10X the value of the car in annual salary.  They can’t even pay cash for the car or come up with even 10% of the value of the car as a downpayment!  Look, I know more than anyone how alluring it is to buy a nice car.  I used to be a car addict with 7 different cars in as many years.  It’s just irresponsibile of consumers to use their credit card for a downpayment when they don’t have a healthy savings account balance to match the entire value of the car before purchase.

BANK OF MOM AND DAD FOR REAL ESTATE