Credit Card Debt Management

The committee of they says there’s no such thing as bad press, and they may just be right, given the fact that MasterCard was picked Thursday to join the S&P 500 and S&P 100 indexes starting July 17. The news comes on the heels of reports that MasterCard will pay a $1.8 billion settlement after American Express accused the company of engaging in unfair competitive practices. And the day that bombshell news broke in late June, MasterCard shares rose while AmEx shares dropped. Go figure.

Seemingly unstoppable, MasterCard shares are still going strong. Apparently, much stronger than General Motors Co., which MasterCard is replacing on the S&P 100 (thus far, no reason given for the GM snub). MasterCard’s sudden elevation to the Big Boys Club is hardly a surprise. It’s stock is like the Google of the financial services sector, hovering around $250-$300 over the past couple months while Visa, American Express and Discover shares stand at only $75, $50 and $14, respectively. And to think that MasterCard’s May 2006 IPO debuted just under $40, amidst widespread skepticism.

So what does all this S&P hype mean for the already-stable MasterCard stock? More than likely, it means really, really good things. According to The Economic Times:

Shares of companies joining the S&P 500 often rise because many portfolio managers try to track the index, and are required to buy shares of companies that enter it.

It also means it’s probably a really, really good time to jump on board before the MasterCard madness peaks, even if you weren’t lucky enough to get in on the ground floor.

Well, we speculated that the credit card industry might be sinking, or at least receding, and that card companies may need to cut back on customer rewards. Guess what — it’s happening.

A recent Newsweek article how American Express and Citibank have cut back their rewards. Specifically, that means no more 5 percent and double-cashback rewards for cardholders who buy groceries and gas. It’s a fine time to yank that reward, given that consumers are increasingly buying only commodities like groceries and gas instead of luxury splurge items. Cardholders trying to navigate the murky waters of credit card rewards nowadays are going to find the ride much bumpier and will probably meet with much more resistance.

One of the cards getting chopped is the Citi Dividend MasterCard, from 5 percent on everyday purchases to only 2 percent (though it’s adding utilities and convenience stores to the list of everyday purchases). HSBC’s Direct Rewards MasterCard is still offering a 5 percent rebate at gas pumps, grocery stores and drugstores, though it is also a potential candidate for a cutback in the future.

The key to making credit card rewards work for you in tough economic times is to go for cashback rewards. Everybody needs a little cash every now and then, right? However, really consider whether it’s wise to put all your gas or groceries on the card just to rack up a relatively paltry cash reward and put yourself at risk for interest charges.

Essentially, by charging “everyday purchases,” you could be flirting with disaster. Is it possible that you might have $150 cash available for gas this week, but choose to use the card instead for its rewards benefit. Then, when the bill comes due, you don’t have that cash to pay it in full (unless you’ve been a savvy saver). By not paying in full, you subject yourself to interest charges that could well exceed any “cashback rewards” you may have earned.

Furthermore, you may not even see the cash rewards for a while, because some companies require it to accumulate to a certain amount. So bottom line, think about it. While these cash rewards are touted by marketing gurus as “discounts” on gas, groceries and utilities, the ultimate discount may just be to go ahead and pay cash to prevent any possible interest charges.

Summer is a time for visiting family and friends, going on missions trips, traveling to faraway destinations and dream vacations, or enjoying a wedding followed by a honeymoon. In short, there’s a lot of traveling going on during these few months.

It can be easy to get caught up in the trip planning and the awe and wonder of sight-seeing, but vigilance is a must when it comes to your credit cards. So how does a person protect their information when jet-setting around the world?

The Kansas City Star has a few good tips, and below are some of the highlights:

-Report lost or stolen cards immediately. Most misuse of your card(s) will occur within a few days, so time is of the essence.

-Memorize your PIN. It may seem like a no-brainer, but there are those unfortunate few who choose to write their PIN down and keep it in a “safe place” in their wallet. Choose an unobvious PIN (i.e. not your birthdate) and try to change it up for each different card.

-Check your card after transactions, particularly in busy locations like restaurants. This will help you ensure, first of all, that you didn’t leave it on the counter/table/floor and, second of all, that the employee helping you handed you the correct card.

-Keep track of your trash and receipts, particularly when they contain personal information and/or account numbers.

-There may be card restrictions for traveling overseas, so call your credit card issuer beforehand to be sure. This will also warn them to expect to see international charges on the card so it won’t be a red flag.

Overall, traveling with credit cards in tow are just like traveling with cash in tow. Keep it close to the vest and use common sense. Your travels will be happier, and your credit report will thank you for it.