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<Background>

I have no debt other than current bill cycle credit cards, which are always paid in full to avoid interest charges. As I use the term, "no debt" also means I own my home free and clear with no mortgage. It has been several years since I adjusted my use of cash back credit cards. My preference is for cards with no annual fee (duh!), and no ramp up in rewards structure. While I pay much more attention to my budget than the amount of cash I'm getting back, I'd rather not have incentives pointing me at spending more than I otherwise might.

Cards I've been using for the past few years are:

1. Citi Dividends MasterCard. Pays 1% cash back on all purchase, with no ramp up. Cash back is paid by mailed check, in $50 increments. I have to pay attention to when the reward builds up and request a check. The most important feature of this card is Virtual Card Numbers, which allow me to set a credit limit and expiration date for online and phone purchases. I use them for purchases at all new-to-me online merchants, as well as merchants whose courtesy and competence I don't fully trust. I also use this card at merchants that don't take American Express. The most important such merchant for me is Sam's Club.

2. Fidelity Investment Rewards Amex. Underlying issuer is FIA Card Services, a division of Bank of America. Has a points system that works out to 2% cash back on all purchases, with no ramp up. Cash is paid by deposit to my Fidelity brokerage account, automatically when the balance exceeds $50. There is a cycle timing issue that lets FIA hang on to my cash back for an extra 29 days or so, but that's a minor nuisance compared to 2% back on everything.

Cards that have earned an honorable retirement in a locked file drawer are:

3. Chase Freedom MasterCard, recently re-issued by Chase as a Visa. Seems to have cash rewards no better than the Citi MasterCard unless I want to have a Chase checking account. Been there, done that, don't want to go back. Chase earned an honorable retirement for this card by changing rewards to my detriment several years ago, and has a heavy burden of proof to earn a place in my wallet for this card.

4. Discover Open Road Card: Earned an honorable retirement when Discover changed the terms from 5% back on gas to 2% back on gas and restaurants, while also changing the increment for cash back from $20 to $50. I couldn't see having a specific card for gas at 2% when I already had a card that paid 2% back on everything.

Recently, Discover has convinced me to start using their card again. The promotion is $75 cash back if I make $1000 of purchases in the months of June, July, and August. That works out to 7.5%, so I was willing to shift some of my 1% and 2% purchases to Discover to clear that hurdle. As I looked, Discover has also created an option to get a Discover gift card with the cash back, in denominations as low as $20. Right now, I'm about $80 away from getting to $1000. I'll get there easily with gas and restaurant purchases between now and August 31. The working plan is to see where that lands me with rewards, and then use Discover for gas and restaurant purchases I'd make anyway until the rewards come out to minimal spoilage before shifting usage back to the Fidelity Amex for gas and restaurants.

</Background>

Today I was at Sam's Club, and saw their promotion for a Sam's Club MasterCard. The large print promises 5% cash back on gas, 3% on dining and travel, and 1% on all other purchases. On the face of it, this is better than Discover or Fidelity Amex for gas and restaurants, and as good as Citi MasterCard for everything else. I sat down to read the terms and decide whether I wanted to jump for the higher rewards.

Stuff that jumps out at me from the terms:

The underlying issuer is Synchrony Bank. I was not familiar with that name, but my good friend Google tells me this is the former GE Capital Bank.

5% on gas is limited to $6,000 of purchases per calendar year. This is far more than I will spend in a year on gas.

5% on gas and 3% on restaurants and travel excludes purchases at warehouse clubs other than Sam's. You do get 5% on gas bought at Sam's Club.

The application includes an agreement to have your Sam's Club membership automatically charged to the Sam's MasterCard.

Cash back is issued as a check mailed in February for cash earned the preceding calendar year. The check is made out to Sam's Club, and must be schlepped to a Sam's Club for redemption. Uncashed checks expire in 180 days, which shouldn't be an issue for me.

Maximum amount of cash back in a year is $5,000. There is no way I'm charging enough in a year to get that much cash back, even if I shift all charges to this card.

There is no mention of online shopping, so I assume this card has nothing comparable to Citi's virtual card numbers.

Opportunities for spoilage: Apparently the cash back is whatever was earned in the year, to the penny. I could quit using the card in December, then close it after getting the reward the following February. Rewards are forfeited if I stop being a Sam's Club member or close the card before the check is issued. I forfeit the rewards earned in a year if they are less than $5. There is also spoilage if I don't keep the account in good standing, which is not an issue.

At this point, I have not yet applied for the Sam's MasterCard. There is no doubt that I can get one if I do apply, and that I can get a credit limit that is suitable for my needs.

Potential pros and cons, as I see them right now, include:

Pros: Better cash back on gas and restaurants, travel being irrelevant to me. MasterCard is accepted just about everywhere.

Cons: Another card to manage for optimal cash back, potentially splitting the cash back pie more ways if I still want to use virtual card numbers for online purchases. Probable hassle redeeming the cash back. If I have problems with Sam's Club down the road, potential cost of an extra year's membership (payable in November) or forfeiting a partial year of cash back.

I'll sleep on this before making a decision. I'd also appreciate thoughts from this board on how good/bad a deal this is.

Does anyone have any good or bad experiences with GE Capital Bank/Synchrony Bank as a card issues that might affect a decision on whether to do business with them?

Does anyone here have this card? Has it been around long enough that you have experience with the procedure for in-club redemption of rewards? If so, how big a nuisance is it?

Is there anything else I seem to be overlooking?

Patzer
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Does anyone have any good or bad experiences with GE Capital Bank/Synchrony Bank as a card issues that might affect a decision on whether to do business with them?

My Mom had a bad experience with GE Capital Bank and their Lowe's credit card. One of those '12 months same as cash' deals, plus I think she got some discounts off future purchases.

They managed to not send her a bill until the payment was more than 30 days past due - which lost her 'same as cash' deal and starting charging her something like 21% interest. It took a lot of calls, with lots of ranting, but she finally got it fixed, paid it off immediately and closed the account - or so she thought.

Turns out the account was still open. The way she found out was that even though she now lives more than 60 miles away from the nearest Lowe's, and will likely never shop at a Lowe's again - they sent her notification that they had changed the address on her account. She ranted at them again, and supposedly, the account has now been closed. I guess we will see.

I have heard of other people who have had bad experiences with GE Capital Bank, especially with their retail cards.

Does anyone here have this card?

Sorry, now living in the land of Costco, with only 3 Sam's Clubs in the entire state, I don't even belong to Sam's Club any more. I did not have the Sam's club card when I did belong - I never found their terms enticing enough to apply.

AJ
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No. of Recommendations: 1
Today I was at Sam's Club, and saw their promotion for a Sam's Club MasterCard. The large print promises 5% cash back on gas, 3% on dining and travel, and 1% on all other purchases. On the face of it, this is better than Discover or Fidelity Amex for gas and restaurants, and as good as Citi MasterCard for everything else. I sat down to read the terms and decide whether I wanted to jump for the higher rewards.

Stuff that jumps out at me from the terms:

The underlying issuer is Synchrony Bank. I was not familiar with that name, but my good friend Google tells me this is the former GE Capital Bank.

5% on gas is limited to $6,000 of purchases per calendar year. This is far more than I will spend in a year on gas.

5% on gas and 3% on restaurants and travel excludes purchases at warehouse clubs other than Sam's. You do get 5% on gas bought at Sam's Club.<?I>

I've been getting similar offers from other entities other than Sam's Club. AAA had a similar offer. I wouldn't want to be limited to gas bought only at Sam's Club. I have not read the small print yet on the offers I have sitting on my desk at home but the first thing I would look at is the 5% on the first $6000 in purchases per calendar year. I would make sure that it is the first %6000 in gasoline purchases, not all purchases. I would be concerned that you could go out and buy $6000 in furniture and then the next time you fill up with gas, you'll find you are no longer getting 5% back on gasoline.

PSU
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I've been getting similar offers from other entities other than Sam's Club. AAA had a similar offer. I wouldn't want to be limited to gas bought only at Sam's Club.

That was one of the first things I looked at. It's not just gas at Sam's Club, it's gas at Sam's Club or anywhere in the United States or Puerto Rico, excluding warehouse clubs other than Sam's Club.

. . . the first thing I would look at is the 5% on the first $6000 in purchases per calendar year. I would make sure that it is the first %6000 in gasoline purchases, not all purchases. I would be concerned that you could go out and buy $6000 in furniture and then the next time you fill up with gas, you'll find you are no longer getting 5% back on gasoline.

I'm pretty sure that it's just gas, but I'll be read it again before pulling the trigger, if I do pull the trigger. Finding a hook like that would make this a no-go, on the assumption that I might have missed worse hooks.

A back of the envelope analysis of my spending patterns says this is worth between $30 and $50 per year to me, over the cash back I get with my current cards. AJ's cautionary tale is one strike against it. I have to think about the in-club redemption and whether the hassle (plus possible customer service incompetence on the part of Synchrony Bank) is worth the added rewards.

It also sticks in the back of my mind that the major point of the offer is to make the Sam's membership stickier. That's good for me as a Walmart shareholder, but not necessarily good for me as a consumer.

There is a Costco being built locally. It's being built in about the most inconvenient location possible without being an hour drive away, but I'd like to check it out. Lots of Fools say Costco is superior to Sam's, but until this one is built I'm not able to check on that for myself. If it turns out that Costco is enough superior to Sam's to overcome the location inconvenience, it would not be a good thing to be tied to Sam's by the rewards card.

Patzer
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Patzer,

You wrote, There is a Costco being built locally. It's being built in about the most inconvenient location possible without being an hour drive away, but I'd like to check it out. Lots of Fools say Costco is superior to Sam's, but until this one is built I'm not able to check on that for myself. If it turns out that Costco is enough superior to Sam's to overcome the location inconvenience, it would not be a good thing to be tied to Sam's by the rewards card.

I like Costco. I think it's a little better than Sam's. But convenience probably trumps any differences. For me, Costco is only 1.3 miles from my house. Sam's Club is a 40min drive each way. At one point when I lived in Texas the situation was more or less reversed, so I had a Sam's Club membership.

In Washington state, having a Sam's Club membership makes absolutely no sense unless you happen to live right next to one of the three clubs. They're all in the Seattle area as am I, but none are close to me.

- Joel
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Lots of Fools say Costco is superior to Sam's, but until this one is built I'm not able to check on that for myself. If it turns out that Costco is enough superior to Sam's to overcome the location inconvenience, it would not be a good thing to be tied to Sam's by the rewards card.

Patzer


Costco carries limited brands. Whether or not you like them will depend on how you like their brands.

I have never been in a Sam's club because the nearest one is 50 miles away.
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vkg,

You wrote, Costco carries limited brands. Whether or not you like them will depend on how you like their brands.

The same is true of Sam's Club.

However Sam's Club generally doesn't carry any (or at least many) Walmart / Sam's Club branded products. Costco carries a competing line of the most commonly purchased items. The brand name is Kirkland, which for some reason is also the name of the city where my Costco is located. ;-)

Costco quality control is pretty good. Most Kirkland products are as good as the name brands. While the Costco price on most name brand items are the same or slightly higher than Sam's, if you opt for the available Kirkland brands I think you come out cheaper.

Walmart does sell some of its own branded (or co-branded) items. And some are worth buying. I have no idea why those items are not available in its various Sam's Clubs. But in general, Sam's Club only offers 1 or 2, but never more than 3 brands of any given product. That's the same with Costco - but Costco is likely to have a Kirkland brand be one of those options. (There may be exceptions for a few things like TVs.)

BTW, I saw a TV report / documentary on Costco a year or two ago. Costco explained that limiting consumer options is an active part of their strategy. They don't want too many options available as it increases the time people spend making a purchasing decision. People generally have a limited amount of time available, so if they feel they're being presented a couple of good options at a good price, they make a purchase quickly and move on to the next item. This increases how much Costco can sell to a given customer in the time they have available.

They also claim they do little more than break even on most items. In fact, about half of their profit can be attributed to membership dues.

They also intentionally randomize the store's layout periodically. (They do this MUCH more often than Sam's Club, in my experience.) That's because they want to force you to go down every aisle to see what is available today. Part of the rational for that is that Costco does special and seasonal buys of various products. Forcing their customers to search for products they normally purchase also encourages them to discover new merchandise that might have not been available on their last trip - and might not be available on the next.

I found this last item particularly frustrating when I first started going to Costco because it broke up a long-standing shopping pattern I had at Sam's Club - I could literally buy everything I needed in 30mins or less at Sam's because I knew that store's layout and with wide aisles I could weave through store foot traffic quickly.

- Joel
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However Sam's Club generally doesn't carry any (or at least many) Walmart / Sam's Club branded products.

Over time, Sam's has added more house brand products. They change the brand names every two or three years, so I don't remember them; but they're pretty easy to recognize as house brands. I started buying Tide powder in bulk at Sam's, later switched to the house brand when it became available. Ditto Kleenex, though Aldi is pretty competitive there. I'm pretty sure the white distilled vinegar I buy is a house brand. I was disappointed when the house brand of whole almonds disappeared; that looks like a price increase to me.

They [Costco] also intentionally randomize the store's layout periodically. (They do this MUCH more often than Sam's Club, in my experience.) That's because they want to force you to go down every aisle to see what is available today.

That would drive me nuts. It bothers me when Sam's moves stuff around and I have to ask an employee where to find something I buy regularly. On top of the inconvenient location, that's enough to make Costco a no-go for me, absent massively better prices than Sam's.

Still thinking about the credit card. May give it a try, but I'm not in enough of a hurry to make a trip just to apply.

Patzer
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They also intentionally randomize the store's layout periodically. (They do this MUCH more often than Sam's Club, in my experience.) That's because they want to force you to go down every aisle to see what is available today. Part of the rational for that is that Costco does special and seasonal buys of various products

I have to wonder if this varies by store (and manager). My regular Costco has a pretty static layout. Left = pharmacy, meds, pets, foods, paper products. Right = TVs/electronics, office goods, home goods, auto/sporting goods. Center = snacks/candy, clothing, media, and seasonal items. Back = fridge/freezer cases, meats, produce, bakery.

The seasonal section is the only thing that changes significantly - it has pool/summer/outdoor items now, then it will turn over for the holidays to decorations, gifts, toys. Occasionally they'll do a furniture or art or jewelry "road show" which takes over the seasonal section. But for the staples I regularly buy, there's little/no change.
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My regular Costco has a pretty static layout.

As with my regular Costco. Items stocked changes but the location of categories rarely change.

I don't like playing hide and seek. If an item isn't in its expected location, I will check end caps because they play games with items that are on special. Beyond that, I give up and assume it has been discontinued.
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jeffbrig,

You wrote, I have to wonder if this varies by store (and manager). My regular Costco has a pretty static layout. Left = pharmacy, meds, pets, foods, paper products. Right = TVs/electronics, office goods, home goods, auto/sporting goods. Center = snacks/candy, clothing, media, and seasonal items. Back = fridge/freezer cases, meats, produce, bakery.

The documentary on Costco was in part an interview with the CEO. I think it's company policy. With that said, I don't think they move the general areas much. For instance in mine, the electronics are just as you come in; household goods are to the right; clothes are in the middle in front of the seasonals; produce in the cooler in back-right; bakery next to the cooler; meat in the middle-back; prepackaged refrigerated and frozen goods in the back left coolers; drinks, pasta, sauces, etc on the left as you move back toward the front; pharmacy products toward the left-front; snack foods and "health" foods toward the center-front. However they move things around inside those broad categories all the time.

For instance, I buy Kirkland's version of vita-water. Its almost never in the same place twice. Same with Quaker oats. Household goods are the same. Even the prepackaged foods in the smaller coolers get shuffled from time to time. I had a hell of a time finding the frozen salmon patties the other day - they'd moved it to an end-cap. Only the bakery and a few other items seem fixed.

Its not enough to drive me insane. It's just a little frustrating at times. But clearly they're doing it for a reason and it seems to work.

- Joel
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My understanding is that they are appealing to human's enjoyment of the hunt...makes going to the warehouse an experience, not just an errand
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I ended up applying for the card. If it turns out to be a PITA, I can always cancel it.

They printed a new Sam's membership card for me that I can use as the credit card as Sam's; the actual card hasn't come in the mail yet.

I was amused by the form letter I got from Synchrony Bank today. It reads, in part:

"When you were approved, we did not assign to your account the best interest rate we offer. By law, we are required to provide you the information in the attached letter explaining that a credit score was used to review your application."

It goes on to give my credit score, per Transunion, as 803 on July 20. That matches the 803 as of July 14 reported on my last Discover statement as a FICO score, though the Synchrony letter doesn't specifically call it FICO. Key factors that adversely affected my score are given as:

1) Lack of recent installment loan information (no surprise there)
2) Number of accounts with balances (Doesn't say whether I have too many or too few. Credit cards I use will look like they have balances on the credit statement, even though I pay the bill in full each month.)

So . . . with a FICO of 803 on a scale of 350 to 850, I didn't get the best interest rate Synchrony offers. I wonder what would be required to get their best rate? I cynically think they aren't giving the best rate to anyone getting the Sam's Club card.

Of course, the interest rate doesn't matter. The cash back and grace period are what matter. I was just amused that I got this letter notifying me that I didn't get the best interest rate, and it doesn't even say what interest rate they gave me. (It does say that complete terms will come with the actual card.)

Patzer
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