Credit Cards - card holder debt-suspension insurance; credit interest rates - Brief Article

Kiplinger's Personal Finance Magazine, August, 2001 by Joan Goldwasser

If a chance to suspect payments without interest piling up sounds good, think again

Would you like to take a break from your credit card bills without interest piling up? That's the appeal of debt-suspension insurance. But beware. Ed Mierzwinski, consumer program director of U.S. PIRG, compares this coverage to widely panned credit life insurance. "It makes the banks rich and you poor," he says.

Plans such as "First Protect" kick in if you lose your job, are hospitalized or get divorced. You can then put payments on hold for up to two years.

The cost? First, you must be enrolled for at least four months before you can suspend payments, at a cost of about $7 to $8 per month per $1,000 of your average balance. Assuming you suspend payments as soon as possible and put payments on hold for a year, the cost would be about $110 for every $1,000 you owed.

Low-interest premium cards Best if you carry a balance

                                RECENT    CASH-ADVANCE   ANNUAL
ISSUER                          RATE(*)    RATE/FEE(c)    FEE

Pulaski Bank & Trust (G)         6.50%     6.50%/none     $50
Simmons First National (G)       8.50      8.50/none       35
USAA Savings Bank (G,P)          8.50      8.50/none       45

                                  LATE/       TELEPHONE
ISSUER                          OVER LIMIT      NUMBER

Pulaski Bank & Trust (G)         $29/$29     800-980-2265
Simmons First National (G)        20/none    800-636-5151
USAA Savings Bank (G,P)           20/none    800-922-9092

No-fee premium cards Best if you usually pay the balance each month

ISSUER                          RECENT    CASH-ADVANCE   GRACE
                                RATE(*)    RATE/FEE(c)   PERIOD

Chase Manhattan Bank (G,P)       9.15%      19.05%/3%    22 days
Wachovia (G)                     9.90        19.99/4     20 days
Capital One (G,P)                9.90        19.8/2.5    25 days

ISSUER                            LATE/       TELEPHONE
                                OVER LIMIT      NUMBER

Chase Manhattan Bank (G,P)       $29/$29     800-413-5661
Wachovia (G)                      29/29      800-842-3262
Capital One (G,P)                 25/25      800-437-9595

Rebate cards Best of the retail cards

                                   RECENT            CASH-ADVANCE
ISSUER                             RATE(*)            RATE/FEE(c)

Kroger Visa                     15.98% ([dagger])   15.98%/3%

Macy's Premier Visa             20.6/19.4(**)       20.6/19.4(**)/3
Bloomingdale's Premier Visa     21.6/19.4(**)       21.6/19.4(**)/3

                                               REBATE
                                ANNUAL         STORE/     TELEPHONE
ISSUER                           FEE           OTHER        NUMBER

Kroger Visa                     none([double    2%/1%    877-257-6437
                                 dagger])
Macy's Premier Visa             none            3/1(#)   800-922-7028
Bloomingdale's Premier Visa     none            3/1(#)   800-670-9840

(*) As of June 8; rates are adjustable, often tied to the prime rate.
(c) Cash advances often have no grace period; additional fees
may be charged. (G) gold card (P) platinum card ([dagger]) for people
with best credit history. (**) store purchases/Visa purchases.
([double dagger]) if you use it at least three times a year.
(#) must spend $1,000 annually.
SOURCE: FOR LOAN RATES AND CREDIT CARDS: Bankrate.com,
N. Palm Beach, Fla.