Here’s a PSA: If you get a fancy box in the mail offering you a Chase Sapphire card, you might want to take a look:
Chase is so anxious for me to try their card that if I sign up they’ll give me 100,000 bonus points if I spend $500 in the first three months — something that’s obviously not much of a problem. Once I’ve done that, I can cash in those points for $1,000.
In other words, Chase is basically willing to pay me $1,000 just to try their card. As near as I can tell, there are no gotchas, and a quick Google search seems to confirm this. Merely getting me to give Sapphire a try is worth a thousand bucks to them.
I got one of these offers yesterday. Since I’d read that item on Kevin Drum’s blog, I took a close look at the fine print. As far as I can tell, Drum is right: as long as I spend $500 on this card in 3 months, I’ll get 100,000 bonus points. Those points can be redeemed for a bunch of variegated crap, but one of the options is cash. My plan is to spend $500 on the card, cut it up, pay the bill, and redeem those points. The whole thing is insane, but there doesn’t seem to be a catch. Some of Drum’s commenters are speculating that banks are trying to shift good credit risks to their books to show that they are “lending”, when all they’re really doing is just churning accounts.
cintibud
Where is my offer Chase! Whaaah
Disgruntled Lurker
And this explains why I haven’t gotten an offer…
cathyx
I did this so much during the Bush years with banks offering me money to open a checking account with them. I too, made sure that there weren’t any loopholes. My first one was with WaMu for $200, the next one was with Key Bank for $150 and the third one was with Wells Fargo for $100.
So I earned $450 by opening a checking account which I then closed within the stated “after 3 months the money will be credited to your account”. I would never really bank with any of them, I’m a credit union girl.
Zach
I don’t recall the details, but I don’t think this is any more ridiculous than many of the pre-credit-crisis deals, and those were extended to people with terrible credit. Before the crisis, my credit limits were going up a grand a month without any request from myself … apparently based on the promise of my graduate student stipend. There were all sorts of cash-back deals with over 3% returns, which means issuers were roughly breaking even on the actual purchase.
PaulW
If this is just a scam to give Chase political cover, I’m not using it. I’m not contributing to any goddamn charades.
Jack the Second
FWIU, the ‘cash’ option for Chase Sapphire is applied against your card’s balance.
So you need to spend $500, get the 100,000 points, then spend another $500 (or perhaps $1000 if you pay off the card before you get the points), then redeem the points to clear your card’s balance, then cut up the card and walk away.
SiubhanDuinne
Mad huzzahs for the (marked-down) BNL title!
mistermix
@Jack the Second: I checked that out, and the rewards website pretty clearly states that they’ll cut you a check.
JGabriel
mistermix, a few Drum’s commenters are speculating that Chase is issuing these to replace consumer cards with business cards and escape the extra consumer protections in new credit card rules. Paying $1000 to switch you from consumer to business credit may be worth that much to them.
Given my personal experiences with Chase, that seems pretty likely to me.
.
Barry
Aside from hooks, such as the one that Jack mentioned, there’s probably also the underlying idea that people *think* that they will play the deal, and then run up a balance on it. In addition, if you miss a single payment, your interest rate goes to 20%. They might be counting on X% of the customers missing a payment (e.g., being late) in the course of each year.
It doesn’t take too many 20% deals to make money.
Raven (formerly stuckinred)
@PaulW: Good, send me yours.
Kirbster
Gee, maybe I should look more closely at those Chase Sapphire offers I get. In general, I open the envelopes, extract anything with my name and address on it and cross-cut shred it, convinced that there has to be a catch somewhere. The rest goes into a recycling bin.
MattF
Chase ‘upgraded’ the card I had with them to a Sapphire card, and from what I can see it’s a surprisingly good deal– note, e.g., that the points on the card don’t expire. For whatever reason, it actually looks like Chase is trying to beat their competition.
El Cid
Colbert pointed out two nights ago that one of the factors in Michele Bachmann’s stunning victory in the Iowa Ames Weirdfest was that she bought the $30 voting tickets for 6,000 people. And received 4,800 votes.
Republican democracy at its finest.
El Tiburon
Remember that family years ago when credit cards first started offering miles? Seems like the dad would buy thousands if not hundreds of thousands of dollars worth of crap. Then return it all. But still get the miles.
Family was flying first class all over before the jig was up.
mistermix
@JGabriel: Yeah, I read all the fine print and there’s no indication of that. As far as I can tell, they’re just trying to buy customers.
@Barry: Yep.
shortstop
Remember that closing a credit card account automatically lowers your credit rating. (But probably not by enough to make this a bad deal.)
DZ
@ #10 Barry:
While I understand your cynicism, your statement is just wrong. Banks do not want customers who miss payments. It lowers credit quality, pisses off Federal regulators and costs them more to manage the account. The interest rate jacking thing was conceived to provide a disincentive to missing payments and, by keeping the higher rate in place, to make you go away. What banks want is for you to take their card, set it up on autoopay and then use it. They make plenty of money from the standard interest rate.
jibeaux
@shortstop:
You don’t have to close it to not use it further, right?
Odie Hugh Manatee
@PaulW:
Ditto. Fuck the banksters and their schemes.
@DZ:
That’s why if you don’t use autopay and instead use snail mail for payments that they will invariable delay crediting the payment to your account until after the due date.
Then they hit you with the higher rates. Yup, they sure hate those late payments!
shortstop
@jibeaux: No, but remember that every block of available credit you’ve accepted is taken into consideration when you apply for further credit elsewhere. If the blocks total too much, you may be turned down for other credit. This is usually not an issue unless your total available credit is way beyond what’s deemed acceptable for your income level.
Also, I assume there’s a hefty annual fee on this card (probably between $75-100), so even if you don’t use it further, you’ll be paying for that if you keep the account open.
Not trying to be a downer on the parameters of this deal, just pointing out the details. It frankly pisses me off that they can lower your credit just for shopping around on cards, when you’ve never been late on a payment or otherwise posed a risk.
jibeaux
@Odie Hugh Manatee:
yeah, I’m with you. I once had a card that had, seriously, a rotating due date. It ranged over several days near the end of the month, but it changed from month to month. Maybe it was supposed to be the last Friday of the month or something, I don’t know. I set up my autopay to pay on the date that it was due and then again on that same date in future months, but due to the due date change the next month it was late. They waived it once I got on the phone, but that’s just a serious trap for busy people.
shortstop
@jibeaux: They all rotate dates. One of the best things about the recent credit card act was that it requires them to give you 21 days instead of (I think it was) 14 to pay.
The best solution for us has been online payment that isn’t automatic. When we get our bills (via email instead of paper, yay), we log on, review the charges, and set the payment amount and date. The whole process takes like 30 seconds a month, with one-time setup time of maybe five minutes. I think pretty much every bank offers it now. Some charge for it; ours don’t.
jibeaux
@shortstop:
The one I have now is always due on the 8th.
I should review the charges more than I do, but I rarely use it and am in debt-paying-down mode, so I just want something that will make sure it keeps getting paid down without racking me up any charges.
Scotty
Do you have to be a Chase member already to receive the offer in the mail?
DZ
@ Odie Hugh Manatee and Jibeaux:
I don’t know what world you guys live in, but it’s different than the one I live in apparently. I have paid every single bill via autopay for more than 10 years. I have never had a late payment and no organization has ever taken more than it was owed. I don’t have to set a date for payments, whoever is owed comes and gets the money from my account when it’s due. With my one credit card, that date varies, but they figure it out, I don’t.
jibeaux
@DZ:
Good for you. The credit card on my autopay requires me to choose a date, and the previous one did as well. If you want to call that a different “world”, okay, but it doesn’t seem terribly uncommon.
DZ
@jibeaux:
You might be right. It may be far more common than I think. Having to set a date would really screw up the process. The only way you could be sure would be to set the date way in advance.
Mark D
The amount of credit you are using vs. the amount you have available actually makes up about 30% of your credit score.
So for those using this thing, ring up the $500 ONLY if you can pay more than the minimum for a few months. Then, get the check, pay it off in full, put the rest into paying off another card/debt or put it into savings, and then put that Sapphire card in a drawer and fuhgetaboudit.
You could also ask them to raise the limit, and still not use it, which would help your score even more because the amount of credit you have available vs. the amount you are using would increase.
NOTE: You’ll have to check annual fees and make sure to pay those immediately (they usually go on your card and, thus, are factored into your interest), and keep an eye on the bill to ensure no identity thief finds it (they’ll use unused or seldomly-used accounts because most folks pay no attention to them — or don’t even know they’re still open in the first place).
For those wondering: I write personal finance articles/books/podcasts for a living, and have for eight years. Even won a few awards, so I stand by the above advice. :-)
dmsilev
@shortstop:
That’s what I do as well. Some of my bills offer autopay as an option, but I really don’t like the idea. I want to explicitly initiate every payment; that way, I can keep track of things. I get emailed bills; my mail program automatically routes them to a special folder, and every week or so, I spend a few minutes and pay the ones that are coming due soon. Once a bill is paid, I move the email from the “to be paid” folder into the “paid” folder; this makes it very easy to see what is pending.
Tommy D
Card companies keep track of people who collect the goodies and quit. … not that you shouldn’t do it, but it might come back to bite you at some point.
shortstop
@dmsilev:
We use autopay only for electric, gas, condo assessments, etc., stuff that’s very or wholly predictable in both amount and due date, and even then we take a quick look at ’em every month. The idea of autopaying a major credit card without first reviewing the charges blows my mind, especially with unauthorized use incidents through the roof these days. Love being able to instantly settle those online in individually initiated payments, though. Wow, I can’t remember the last time I snail-mailed a bill payment that wasn’t to a doc’s or dentist’s office.
shortstop
@Mark D: Thanks; can you explain this more explicitly? What is considered a good/great/ideal ratio of available to used credit? And is it not still true that an account closed voluntarily by a consumer negatively affects that person’s credit score?
Martin
Huh. I’m almost positive there was one of these sitting in the recycling bin this morning (we get credit card offers constantly). I’ll go buy the compressor, nailers and accessories on my wish list with the $500, and have the orthodontist put the next two payments on the free $500. Free nailer! I love free tools!
What’s driving this is that consumer borrowing has been dropping steadily since 2008. Total household debt is down 10% since then. That’s a big part of the consumer demand problem. While it’s what consumers needed to do and it’s responsible, it’s also having an impact on the economy and jobs. It’s looking like it’s bottoming out now, but banks are really hurting for customers looking to borrow money.
Kirk Spencer
Is there a “we can change the terms unilaterally and without notice” clause?
harlana
@shortstop: It certainly affected my credit record, my credit had been perfect, but then, about a year ago, I was unable to get a 0% interest for 12 months card because of that, even though I always paid my credit card bills on time and paid off those previous credit cards in full! Also, I very rarely carried an ongoing balance (which, apparently, the card company had a problem with). Once that happened, I wasn’t too keen on getting any new credit cards. But the offer is tempting and I sure could use $500.
tim O
I’ve been using a chase debit card for my business and built up over 100,000 points. When they canceled the program for debit cards, they allowed me to keep the points. I cashed them all in and did receive nearly $1000 so the concept is valid. Just get your magnifying glass out and check that fine print. Even if you have to keep the card for six months, it’d be worth it.
Fucen Pneumatic Fuck Wrench Tarmal
i want to know what the fulfillment time is on them cutting you a check, how many bill cycles do you have to ride with them, until they put the money in the mailbox? or what is fulfillment on the credit against your account?
i bet they can push that cash/credit back awfully slow when they want to.
PaulW
@Raven (formerly stuckinred):
Not with my name on the card!
EmilA
My strategy is to set up an autopay on each card for $50, so I never miss a minimum payment. Additionally, I log in each month, check charges, and pay off the balance in full. But that way if I forget, I only get a minimal interest charge rather than a “missed payment” fee or what not. My due dates also move around, so it can be a bit confusing.
Mark D
@shortstop: Well, the amount to which it affects a score is part of the credit bureaus’ super-duper-doubleplus-secret algorithms they use, as is the perfect ratio of debt utilization.
But overall they like a TOTAL debt ratio (the amount you pay out overall vs. the amount you take in overall) to be less than 40%. That works with a card as well — thus, if you have at least 60% of your card balance still available, that should be positive.
The only reason closing an account will negatively impact a score (though not nearly as much as it used to) is due to that credit usage aspect of a score — closing the account reduces the amount of credit you have available to use.
It’s definitely a tightrope to walk — hell, our debt ratio is nearly 70%, yet because we’ve paid on time (35% of a score), have four old store cards still open (good debt usage, which makes 30% of a score), have had credit for a long time and used it without problems (15%), have used a wide variety of credit products (10%), and haven’t applied for new credit all that often (10%), our score is really, really solid.
More info is at http://www.FTC.gov/credit if you’re interested. They have some pretty helpful info over there (it’s a resource I use quite often).
EDIT: I also have to agree with others about how the card companies treat folks who don’t use their card that often — they WILL raise your rates since they can make more money off of less transactions that way. And as long as they give you 45 days notice, there’s not much you can do. Well, other than try and prove that you’re getting a worse rate than others of your same credit profile. That’s part of the new Dodd-Frank bill — companies have to show why you received less favorable terms than the average customer. But I get the feeling that’s gonna be a bitch to prove.
shortstop
@shortstop: Okay, I did a little nosing around on this. “Experts” recommend keeping your debt-to-credit ratio at between 0-75%, depending on who’s talking (roll eyes). Most seem to agree on 30-50%. And never close a zero-balance account because you lose all your good history with it and bring your DTC ratio down, thus knocking your FICO score down.
That means only (or mostly) taking on cards with annual fees we’re willing to pay indefinitely. I will add (didn’t see this in my reading) that store charge accounts used to be all right for this since virtually none charged annual fees; now, however, major department stores seem to all want to issue VISAs/MCs. I can’t like that.
shortstop
Thanks, Mark. Good info.
jibeaux
@shortstop:
One I will vouch for is the Target DEBIT card. They also have a credit card, but I don’t do those anymore. But they have a debit card just like the credit card and it gets you 5% off all Target purchases. I can’t imagine they make any money on that, but maybe it’s just something they offered to try to satisfy all the people who say they don’t want another credit card. For…whatever reason.
shortstop
@jibeaux: Thanks. I have no problem having credit cards and I like the rewards (miles, points, etc.) I get on mine. I just don’t like paying annual fees. Or foreign transaction fees, for that matter (I keep meaning to get a Capital One card to use overseas, now that I’ve determined that some of their cards don’t have an annual fee).
The Spy Who Loved Me
I pay all credit card charges off in full each month. I do, however, try to rotate the cards I use every three or four months, beacause I discovered that if you never use the card they will close it out. This happened with a Citibank Mastercard that I never used. As stated above, if your card is closed out, it can hurt your FICO score.
The advantage of having so many credit cards is that I have a huge amount of credit available, but an almost constant zero balance.
I hope Chase (I already have a Chase Slate card) sends me a Sapphire Card!
birthmarker
@Mark D: I currently have a Chase Card for Marriot Reward Points, which has worked out to be a good deal. I’ve had no problems.
Don’t forget that even if you pay your card off monthly, the cc companies make a fee from the merchants on every transaction.
If this offer shows up at my house, I will take it up. I smell laptop!
Carol from CO
They have to do something with all that cash they’re sitting on and it might as well be used as bait. Right?
Egilsson
If you migrate existing credit card balance to the Chase Sapphire, does that count for the $500?
Mark D
@Egilsson: You’d have to read the fine print, but I’m guessing that’d be a “no.”
Most CC companies charge different rates depending on the type of transaction, with straight purchases being one rate, cash advances another, and transfers still another. So you’d need to read the Sapphire card’s super-duper fine print.
Marginalized for stating documented facts
It’s a scam.
Guaranteed.
If you get one of these cards, you will not get cash back, you will not get anything back, and you will wind up massively shafted with some kind of retroactive interest rate hike or new “gotcha” rules change that costs you a lot of money.
You have been warned.