Simple Cards

Have you ever seen an ad for the Jitterbug phone.     It is a mobile phone that does something remarkable; it only makes telephone calls.    It offers no instant messaging, no web browsing, and no cameras.     The idea is that many people, myself included, only want to use their phone to call people, and are happy using their cameras and computers when they want to take pictures and use the internet.

Credit Card Companies Try Simple

Earlier this year President Obama called on credit card issuers to offer “plain vanilla” credit cards.    The idea was that current cards are too confusing with a myriad of terms and conditions that few people really understand.   His statements came during the debate over the CARD act.

The President eventually had the privilege of signing the CARD act into law, however, it did not contain any provisions requiring banks to offer a plain vanilla card.    Now, banks are starting to heed the President’s call for simpler credit cards.      The Washington Post has an article highlighting some of the new simple cards.

Bank Of America Goes Basic

Next month, BofA will be offering a new “Basic Visa” card with simplified terms.    There will be a single interest rate for all transactions, including charges, balance transfers, and cash advances.    There is a $39 fee for late payments.    Interestingly, they claim that all of the terms and disclosures should consume only a single page.    According to other reports,  this is one of four new cards they will be offering with simplified terms.    The interest rate will be Prime plus 14%.

Chase’s Blueprint Card

I have been seeing ads on tv for this card.   The ads tout the benefit of being able to choose which expenses to pay off in full and which to carry a balance on.    You can also set a target date for paying off your balance, and they will calculate how much you need to pay every month.

My Take On These New Cards.

Simplicity can be a plus, as anyone who has tried to program their VCR can attest to.    While, I find some of these changes to be either trivial or irrelevant, others strike me as genuinely innovative.

With Bank of America’s Basic card, it is a little trivial that everything has the same interest rate.    That is simpler, but I am sure some rates are better and some are worse than their other cards.   I have to assume that balance transfers and cash withdrawals still have different fees and terms than purchases.   Typically, transfers come with a “transfer fee”, and they both lack a grace period.   If that has changed, it would make the card much more interesting in my opinion.    I also like the condensation of the terms and conditions to a single page.     I am sure someone had to spend a few hours working on it to cut out all of the mumbo jumbo, but that should have been their goal all along.    I haven’t seen the page, but it wouldn’t surprise me if there are unique pages mailed to customers in each state.    Currently, your terms and conditions contains all sorts of clauses that only pertain to residents of one state or another.   Having unique pages would make their life slightly more complicated, and our lives vastly less so.     Actually, it can’t be that hard.   They already print out a unique statement for each customer every month, how hard would it be to print out one of 50 different agreements to go with it as well?

My Take On Chase

I think it is a bit irrelevant that Chase’s allows you to decide which charges you want to pay off and which you don’t.     Money is money, and it doesn’t matter if you feel like you are “paying off” your $100 shoes or your $100 grocery purchase.   It remains unclear whether or not you will lose your grace period on the items you “pay off” every month.   If you can retain your grace period on purchases that are paid off, then this could be a genuine innovation.  I do find it innovative that Chase will give you recommended amounts to pay in order to pay off your entire balance by a set date.    Hopefully, this will help people pay off their balances quicker.

In Conclusion

The CARD act is about to bring change to the credit card industry.    Unlike the doom and gloom scenarios painted by the industry while the act was being debated, not all change will be bad for customers.    As we are seeing here, some credit card companies are using innovation as a way to attract and retain customers.    I applaud these new ideas, so long as they are striving to be customer friendly.    In the end, banks that change through pro-customer innovation will triumph over those who try to adapt through the adoption of anti-customer terms and fees.