This is not a sponsored post. American Express or anyone else doesn’t pay me anything if you apply. I’m just passing along the deal.

I knew about this card for some time. I didn’t apply until now because of its $45 annual fee (waived in the first year). Now the signup bonus will cover the annual fee for the next 10-15 years.

Purchases on the SPG AmEx card earn one SPG point per dollar spent. Again, at a value of $0.02 per SPG point, it’s at least as good as the Schwab Visa card (no longer accepting new applications).

Given that you can get a Fidelity AmEx card any day with 2% cashback and no annual fee, the SPG points you earn have to be worth more than $0.02 per point to make the SPG AmEx card worthwhile. At the  price point I usually spend on a hotel room, Starwood’s Category 2 hotels are a very good value for 3,000-4,000 points a night. If I were to pay for a room in cash, I’d have to pay about $100 a night including all taxes. That makes a SPG point worth 2.5 to 3.5 cents.  Instead of getting a 2% reward in cash, I’ll get a 2.5%-3.5% reward in hotel points.

Hotel points are much easier to use than airline miles – it seems airlines never let me use miles on the dates I want. However, I never had any problem with finding a room when I wanted to redeem hotel points. SPG specifically advertises no blackout dates.

Unlike booking through Priceline or Hotwire, you can cancel a hotel room booked with SPG points, usually up to the date of arrival or the previous day. You also know for sure which hotel you will be staying at, versus taking a chance with having a bad one assigned to you by Priceline or Hotwire.

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In a nutshell, Blueprint is a fancy suggested payment calculator. For customers who carry a balance, Blueprint lets them set up some rules and helps them calculate how much they should pay based on those rules.

In an ideal world, nobody carries a balance on their credit cards and everybody always pays in full. Because we are not in an ideal world, Blueprint has its place.

There are four major features in Chase Blueprint:

Full Pay.  Customers can designate charges in any of 14 "everyday" categories as Full Pay. Blueprint will include all new charges in those categories in the suggested payment amount.

A benefit of declaring Full Pay is that these Full Pay charges receive a grace period. Normally when the customer carries a balance, there is no grace period: all new charges accrue interest right away. With Full Pay, the credit card works like a deferred debit card for the Full Pay charges. This grace period privilege will be removed if the customer fails to honor the full pay pledge in three out of any six months.

The 14 "everyday" categories are:

• Department Stores and Catalog
• Dining
• Drugstore
• Entertainment
• Gas and Convenience Stores
• Grocery Stores
• Health clubs and Membership
• Laundry and Dry Cleaning
• Office and School Supplies
• Salon and Beauty Supplies
• Transit
• Utilities
• Wholesale Clubs and Discount Stores
• All blink Purchases (blink is the swipeless RFID technology embeded in some cards)

Split. For larger purchases, customers can select the number of payments to pay it off or select a fixed monthly payment amount. Blueprint will include it in the suggested payment amount.

Finish It. For existing balance, customers can also select the number of payments to pay it off or select a fixed monthly payment amount. Blueprint will include it in the suggested payment amount.

Track It. This one has nothing to do with suggested payment calculation. It lets customers enter a spending target by category and see how they are doing against those targets.

The Blueprint suggested payment is just a suggestion. The cardholder is still only obligated to pay the minimum payment. The account statement shows both the minimum payment and the Blueprint Payment.

The account statement also marks the "full pay" charges with a special icon and includes separate sections for Full Pay, Split, Finish It, and Track It. See sample statement for more on those.

I can see Chase made substantial investment in creating these features. Full Pay encourages customers to pay for everyday purchases in full instead of adding to their debt. Split It and Finish It help customers set a target date for when the purchases will be paid off in full, instead of just letting the customers make the minimum payment. For customers who carry a balance, these are very helpful tools.

Blueprint does not apply to cardholders who always pay the card balance in full. For these cardholders, Chase offers automatic payment which debits a bank account for the full statement balance on the due date. I’ve been using it for a long time. No late fee, no finance charge, guaranteed.

The automatic payment feature from Chase is very easy to set up. You can set it up online (for my two other cards from American Express and FIA Card Services, I had to call the card company for a paper form). It’s also smart. If the statement balance is $500 and a $50 refund comes in before the due date, Chase will automatically adjust the bank debit from $500 to $450.

Chase has not added Blueprint Payment in its automatic payments options. It should.

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I like Bob Sullivan. I reviewed and recommended his book. His blog posts are usually in depth, which I like. I linked to some of them in the past. But sometimes, his consumer advocacy also becomes much ado about nothing. A recent example is his post Chase dumping former WaMu card holders.

Chase took over Washington Mutual (WaMu) last year. Customers who had bank accounts and/or credit cards with WaMu became Chase customers. Chase had a review of the accounts they took over. They decided to close some of the credit card accounts they inherited from the WaMu portfolio. What’s wrong with that?

Customers complain that they shouldn’t have their credit card accounts closed, because they have always paid on time. Paying on time is a necessary condition for having a credit card. It’s not a sufficient condition. Having a credit card open is not a God given right.

It’s a two-way street. A consumer decides which cards they want and keep. A credit card company decides which customers they want and keep. For the closed accounts with a balance, Chase is not demanding full, immediate repayment. People can still take their sweet time to pay the minimum payment every month. They just can’t charge more on the cards.

A consumer can decide to apply for a credit card, use the card a few times, grab the signing bonus, never use it again, and cancel it when the annual fee kicks in the next year. A credit card customer can also decide to only use the card for the special categories with the highest rebate. 5% on gas. No amount of merchant fees will cover for that. If the customer does not carry a balance, it’s a guaranteed loss to the credit card companies on those transactions. It’s all fair game.

When a customer carries a balance, they can decide to pay it down at any point of time, or borrow more at any point of time. No advance notice or approval is required. Compare that to a traditional loan, which is one-way: you borrow up front; you can pay it down but you can’t borrow more unless you make a new application.

What if the customer had a job when they applied for the card but they don’t have a job when they borrow? The credit card company still has to let them borrow. Why shouldn’t a credit card company be able to decide whether they want to keep anybody as a customer?

There are laws against discrimination based on race, gender, religion, etc. Short of those, I honestly don’t see what’s wrong with a company not wanting to keep some customers. It doesn’t matter if the affected customers have good credit history or not. If they don’t want you, they don’t want you. Just like a consumer can decide they don’t want a particular card because they don’t like the color of the card, it doesn’t matter how great the card is otherwise.

It’s a two-way street. You take your picks. They take their picks. End of story. If one company doesn’t want you, there are other companies to choose from. Move on. If nobody wants you, well, that tells you something.

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A personal line of credit and a credit card are both unsecured open-end ("revolving") credit products. In a nutshell, a personal line of credit is like a credit card without a grace period or rewards, but with better cash advance features. Lines of credit are very common for businesses whereas credit cards are more common for individuals (there are also business credit cards). Based on my own personal line of credit with Wells Fargo and my three credit cards from American Express, Chase, and FIA Card Services (Bank of America), I summarize the differences in the table below. Red indicates inferior product features.

Generally speaking, a credit card is better for purchases. A personal line of credit is better for cash advance. Banks don’t advertise personal lines of credit as much as they do for credit cards. Perhaps that’s why more people don’t know about it.

Because I, like half of all credit card users, and I hope 100% of my readers, don’t carry a balance on my credit cards, I never paid attention to the APRs on my cards. Now that I think about it, I wonder why credit card companies are so much against cash advance. First they give you only 20% of the purchase credit limit for cash advance. Then they charge you 3% cash advance fee plus a much higher interest rate, with no grace period. They obviously see cash advance as more risky than purchases. Right now you can charge almost everything on a credit card. What can you do with a cash advance but you can’t charge as a purchase? I can think of paying rent, paying other loans, and paying taxes, although it is possible to pay mortgage with a credit card for free. What else?

Not all banks offer personal lines of credit (at least they don’t advertise it online). Almost every bank offers Home Equity Loan, Home Equity Line of Credit (HELOC), auto loans, and loans for motorcycle, RV or boat. These are all secured loans. For personal, unsecured revolving loans, some banks basically just push the credit cards. Using my Top 10 Banks list, here’s what I found from each one.

Four of the top 10 banks don’t offer unsecured personal line of credit or at least they don’t advertise it on their web site. Note the top two banks, Bank of America and Chase, are also the biggest credit card issuers. I also checked a few credit unions around me. They all offer the personal line of credit product. Large, popular credit unions like PenFed, Navy Fed, and Alliant CU have it too. I guess by tradition personal line of credit is more common in credit unions than in banks.

Elsewhere on the web:

• Bankrate.com: Borrowing with personal lines of credit

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I submitted the application online. The questions were as expected: name, address, Social Security Number, employment information, income, size of the credit line requested, and the purpose of borrowing. They said a decision typically takes two business hours. I waited all day but I didn’t hear anything. I finally called and they said my application was declined! If you can believe it, they asked me if I would like to be referred to Wells Fargo Financial, their subprime unit. Me? Subprime? No, thank you.

The underwriter said the reason for the decline was that the size of the credit line I asked for was too high for my income. Fine, tell me what you can give me. No, they just flat out declined me. It’s been widely reported that credit card companies are cutting people’s credit limits. They have spared me so far. Ah, the credit crunch finally hit me.

Because having a line of credit linked to a checking account is part of my carefully designed strategy for emergency-proofing my emergency fund, I swallowed my ego and pride and had a phone rep appeal my case with the underwriter. After a few rounds of phone calls, I finally got it approved with the lowest credit line they can give to anybody for that product. It’s an acceptable starting point. I can have them raise the credit limit later after the credit crunch passes.

The phone rep told me the underwriter couldn’t give me a higher credit line because I already have plenty of credit available to me from my three credit cards. The underwriter said if I were to max out on all my credit cards, the required payments would be too high for my income. That actually makes sense, although the credit limits on my three cards are quite modest compared to what others said they had. Perhaps that’s the reason none of the credit card companies cut the credit limit on my cards. I see fellow blogger Sun has over $200,000 combined credit limits from 9 credit cards. When I asked How Long Can You Live On Your Credit Cards? last January, a reader said he or she could live six years just on credit cards. I can live only six months on my credit cards. Those credit card companies are much more trusting than my Wells Fargo underwriter. Maybe the conservative nature of Wells Fargo is a reason why Wells Fargo is a relatively strong bank.

Everybody says you should have your credit limits as high as possible to keep your utilization ratio low and your credit score high. This experience shows that having high credit limits can prevent you from getting new credit elsewhere. Because I just refinanced my mortgage, I saw my credit scores (790). I know they declined me initially not because of my credit scores. It’s an issue of maximum potential debt to income ratio.

For my low credit line, I also had to fax in a bunch of documents: W-2, paystubs, and utility bill. I never had to do it before for any credit card application. It’s a small inconvenience for me to gather the documents and fax them, but I think all credit applications should be done this way. Applying for credit is a serious business. We shouldn’t make it too easy. I do wonder why a personal line of credit is so much more difficult to get than a credit card. A personal line of credit is treated as a real loan and looked at by a real person. Credit card applications are typically decided by automated systems with instant approval. Professor Adam Levitin of Georgetown University wrote in his blog post Credit Card Defaults–Piggybacked Underwriting:

"There is virtually no income verification in the [credit] card industry–all loans are stated income loans (a/k/a liar loans), and we know how well that worked for mortgages (and there’s more temptation to lie about a card as a default won’t cost you the house)."

I don’t know why they do full doc loans for a personal line of credit while they do stated income loans for credit cards. I’m guessing it’s because with a credit card they can price for risk and adjust rates more easily down the road. If any banker reads this, please chime in.

After all these run-ins with the bank, I’m thinking what it takes to establish a relationship with a personal banker at a branch. Instead of calling different departments at different 800 numbers, getting a different phone rep every time I call, and repeating what I said each time, I could let the banker at the branch make the calls for me. I heard that’s how banking was done in the old days. A local banker knew you and served you. Now everybody self-serves online or calls the call center a thousand miles away or across the globe. I know Wells Fargo is known in the industry for relationship banking. Getting help from a banker for a single point of contact will probably make things easier for me. I will inquire when I go into a branch next time.

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Two years after I canceled oldest credit card and lowered my total available credit limit by about 25%, my credit scores are still going strong. They changed very little since I looked at them a year ago.

The lender also sent me a combined credit report from all three credit bureaus. All the open accounts are reported correctly. There are no suspicious entries. The report also shows many more closed accounts. They are all marked as "account closed at consumer’s request."

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Professor Levitin said the legislation’s approach is wrong. He said if you ban A, B, and C, they will come up with D, E, and F. He suggested instead of banning specific practices, we should standardize most part of the credit card contract. Credit card companies can still price their products however they want. They just fill in the blanks in the standard contract with their numbers. That way consumers can compare the contracts and decide which product is best for them.

I relate to my recent experience in refinancing my mortgage. Much more is at stake with a mortgage than with a credit card. Yet when I signed the long promissory note, I only focused my attention on a few places: principal, interest rate, term of the loan, interest rate fixed or variable (fixed), prepayment penalty (none), due date (1st day of every month), grace period (15 days), and late fee (5%). The rest was pretty much standard. I agree with Professor Levitin when he said credit cards are much more complex with many more prices than a straight-up loan. For people who carry a balance, it’s very difficult to compare and understand all the different prices.

Ideally nobody carries a balance on their credit cards. But that’s not the reality. Borrowing from credit cards is legit. So is charging interest on such borrowing. We just need to make it much more straight forward. If you borrow money, you pay interest, plain and simple. Standardizing the credit card contract is a great way to do it. Between reading the contract and protecting the consumer, I vote for protecting the consumer.

I say this as someone who currently enjoys the float, the rewards, and free rental car insurance from credit cards. I’d like to see the credit card market bifurcate into two:

1. True credit cards with no annual fee, no grace period, no rewards, no or low merchant fees, and no surcharge at the stores. You pay interest for the money you borrow.
2. Deferred debit cards which automatically debit a linked bank account, with an annual fee (maybe), a grace period, rewards, higher merchant fee, and a surcharge at the stores. If you like the convenience, the added protection, the float, and the rewards, you pay for them. If the merchants want to attract you with your higher spending, they will subsidize you. It will be up to each merchant to decide how much they will subsidize and up to each consumer to decide whether the benefits are worth the surcharge.

I think that’s a much fairer system than the one we have now. At the point of each purchase, the consumer decides whether to

(a) pay now by cash or debit card; or
(b) pay later by a deferred debit card with a surcharge; or
(c) pay later by a credit card with interest

For more information on what the new Credit CARD Act does and doesn’t do, please read:

• Credit Card Reform: An Analysis of the Credit CARD Act by CCH
• Dispelling myths on credit card legislation by Bob Sullivan at Red Tape Chronicles

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I had been in the process of doing a mortgage refinance. At 9:30 in the morning that day, I got an e-mail from my loan advisor with my final HUD-1 closing statement. Documents signing was scheduled at 11:00. I had been waiting for this for quite a while. I had money ready in my Fidelity mySmart Cash account. Not a problem, except they required a certified check. In my previous refinances, I’ve always been able to submit a personal check. So I erroneously assumed that it would also be the case this time, without asking the loan advisor ahead of time. My bad. I needed about $4,000 for a certified check. I had to have it in about one hour.

I also have a checking account with Wells Fargo, although I only used it for depositing paper checks. I went into a Wells Fargo branch and asked them if they would allow me to deposit a personal check (from Fidelity mySmart Cash) and make it immediately available for the certified check. Despite my having a "top of the line" relationship checking account with Wells Fargo, they said no, which I could understand. I was basically asking them to advance money to me before they collect on the check. I called Fidelity. They said in any single day I can withdraw maximum $500 from an ATM and do a cash advance against the Visa debit card in a bank branch for up to $2,499. Theoretically I could do both and get $2,999. Because the Wells Fargo ATM charged $3 fee, withdrawing $500 plus the $3 fee would throw me over the $500 limit. I had to withdraw $480. Together with the $2,499 cash advance, I got $2,979.

With the few hundred dollars that happened to be sitting in my Wells Fargo checking account, I was still short $300. Although I was disappointed with Wells Fargo not trusting me for even $300, I was focused on getting the certified check done as opposed to whom I should blame for my scramble. I took out my Chase credit card and did a cash advance against it for $300. The cash advance fee from Chase was 3% of the advance, with a minimum of $10. Interest would also accrue right away without a grace period. Because I was able to make a payment on Chase’s web site with the linked checking account and they would make it effective on the same day, I would not owe any interest. Even if there was interest for a few days, the interest would be minimal ($300 * 20% / 365 = $0.16 per day).

$10 cash advance fee did it. I gave my card, signed a slip, and got $300 in a few minutes. I walked out of the bank with the certified check I needed. I signed the refinance documents on time. By coincidence, mortgage interest rate went up as much as 0.75% on the same day I signed my documents. I did not want to give the lender any excuse to back out of the deal.

The APR for the $10 fee on a $300 cash advance for two days is 39,608%. To be honest I don’t care although I calculated it for writing this post. Chase credit card gave me the money when I needed it. Nobody else could do it in the same timeframe for less. That’s what mattered.

After the dust settles, I need to re-think how I should handle emergency cash needs. When I come up with a strategy, I will write about it. Meanwhile here’s my question for you to think about:

If you need $4,000 in the next hour, how will you get it and how much will it cost you?

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While credit card companies typically reimburse customers against unauthorized charges, having your credit card number stolen is still a hassle. You have to get a new card number, update your recurring charges, and change your bill payment set up. It’ll be best if your card data aren’t stolen in the first place. If you have the right card, you can make your credit card number more secure by using one-time card numbers.

You need a card by Citibank, Bank of America, or Discover. These banks offer software that generates a one-time card number, officially known as a “controlled payment number.” You can configure the expiration date and the maximum amount allowed for the one-time card. Once used, the card is tied to the merchant where it was used. If you gave the card number to XYZ.com online or your dentist’s office over the phone, only XYZ.com or your dentist’s office can use it. If you put the maximum at $50, they can only charge up to $50. If the card number is stolen, the thief can’t use it elsewhere. They don’t have your real card number.

The banks call this software by different names. Citibank calls it Virtual Account Number. Bank of America calls it ShopSafe. Discover calls it Secure Online Account Number. Under the  hood, they are pretty much the same thing. The software is made by the same company: Orbiscom in Dublin, Ireland. Orbiscom is recently acquired by MasterCard for $100 million.

I have used the Orbiscom software for one-time credit card numbers for a few years. It works well. I use it for online, mail, and phone orders. These days you never know who’s going to lose your data once you give your credit card number out. With the one-time card numbers, you gain a little bit peace of mind.

This is not an infomercial. I’m not involved with any of these companies other than being a customer.

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“What is a healthy borrowing level for the economy? What were we at before the credit market started to freeze-up? Where are we now? Are we trying to prop up something that is unsustainable or trying to get the market back up to a healthy level?”

So I’d like to ask, how long can you live on your credit cards? In other words, what is the ratio of your combined credit limits on all your credit cards to your monthly expenses? Mine is about six months of expenses. That means I can live on my credit cards for six months if I don’t get a single penny of income. I think that’s very generous on an unsecured basis. What about you? Do you think your credit limits are too high?

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