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Author: MFFerdZoo Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308881  
Subject: Re: Private Issue Date: 9/23/1998 6:28 PM
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GKosh wrote:
I used to have a Private Issue card that gave up to 2% cash back.

However, they started charging a fee for having the card and I refuse to pay
fees to carry their card.

I cancelled and started using my regular old 1% cash back discover card with no fee.
======================================================
I used to feel the same as GKosh regarding paying an annual fee to use a credit card until I did some analysis between credit cards.

Let's assume the following in a comparison between the Discover Card (1%) cash back max with no max dollar amount and the Private Issue Card (2% cash back max up to $500 with $18 annual fee).

I've constructed the comparison using a scenario of $15000 total annual charges.

Discover______________%rebate_______$value
$0 to $1000___________.25%__________$2.50
$1001 to $2000________.50%__________$5.00
$2001 to $3000________.75%__________$7.50
$3001 to $15000_______1.00%_________$120.00

In this example the maximum annual benefit on the Discover Card is $135.

Private Issue_________%rebate_______$value
$0 to $1000___________.25%__________$2.50
$1001 to $2000________.50%__________$5.00
$2001 to $3000________.75%__________$7.50
$3001 to $12000_______1.00%_________$120.00
$12001 to $15000______2.00%_________$60.00

In this example the maximum annual benefit on the Private Issue Card is $195. Subtracting the $18 annual fee results in a net benefit of $177 or $57 more than Discover. The more you charge above $12000 per annum you'll obviously reap greater rewards

Clearly, this is only beneficial if you charge a great deal. I happen to do exactly that, I charge groceries, gas, dining, entertainment, etc., literally everything I can (I'm also a stickler for paying balances in full each month with no exceptions). If my mortgagor would let me, I'd charge my monthly mortgage payment. The bottom line is that the $18 annual fee, while a nuisance, is clearly not a "deal breaker" if you charge heavily.

Regards, MFFerdZoo
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