American Express

Costco and Visa Neglect To Resolve Issues

August 28, 2016 By Amanda Blankenship 5 Comments

In June Costco began transitioning from its American Express co-branded credit cards to Citigroup-Visa co-branded cards. There were many delays and general confusion surrounding the switch. Now many Costco customers are threatening to cancel their memberships because they are unhappy with the switch to Visa.

Two months after the switch was made customers say that major problems have yet to be solved. Costco customers’ biggest complaint is that the two companies (Costco and Visa) are not doing enough to fix unresolved issues.

Issues Remain With Costco’s Switch to Visa

The change from American Express to Visa affected 11 million of the company’s 81 million members worldwide. It also made it so that Visa credit cards are the only credit cards being accepted at the wholesale retailer. While many Costco members were not initially happy with the switch, most of them were willing to stick out the change. However, now that the switch has been made and issues remain unresolved, many customers are reconsidering leaving.

At first the Costco Visa issues ranged from simple general confusion to customers not receiving their new cards in the mail. Customers have also complained about not being able to reach a customer service representative when they called for assistance with the new card. Citi CEO Michael Corbat said that the concerns and issues that many customers are complaining about is something that the company will be able to fix in the short order.

Citi Says That Costco Switch Was a Success

Costco customers beg to differ though. Corbat made that statement in July and members are saying that no fix ever came and it has led many people to cancel their memberships at Costco. Citi has taken the primary role in the transition as the credit card issuer and the company says that the switch, as a whole, has been a success. In fact, the switch has led to close to 900,000 new application for Costco co-branded cards. According to Citi, the angry customers are a small minority. Citi expected there to be some kind of bump in the road though, given the size of the transition that was to occur.

“With a conversion of this magnitude — one of the single largest portfolio conversions in history (11 million cards) — and a brand as beloved as Costco, call volumes were unprecedented,” Jennifer Bombardier, a Citi spokesperson, said. “With a portfolio of this size and eight months of pent-up demand during which time we couldn’t address questions on the new product or existing accounts as the portfolio was with a different issuer, the call volume was groundbreaking as of June 20.”

Problems With Costco-Visa

Costco Visa issues persisted after their first strain of problems during the switch, some customers has also had problems with automatic payments. Many people have had their automatic payment setups fail and have been charged interest or even had their credit cards canceled.

Other Costco Visa issues include a confusion surrounding Citi’s website, unexpected charges and blocks for people who are traveling. Payments that were made around the time of the transition have also seemed to have been lost and customers have expressed general confusion when it comes to the card’s APR.

What is most frustrating for customers is the customer service, or lack-there-of, that many people are receiving. Many of the interactions with Citi customer service have lasted anywhere from several days to one month before anything got resolved (if it ever got resolved). Many customers are waiting to see their next bill to verify that the problems they are having have been taken care of.

How will Costco fix its Visa issues?

Costco is attempting to better equip its stores to assist its customers with the new cards. Each location hired on about 20 or more employees to help people sign up for cards and answer questions regarding the credit card. Citi has also increased staffing at its call centers.

Stories of bad customer service can ruin a company, especially when social media platforms are so readily available for people to sound off on. Costco is a company that relies on customer loyalty and this credit card debacle had got some people nervous about whether or not they should continue their memberships. However, most people have said that they will continue to shop at Costco.

Have you experienced issues with the Costco switch to Visa? If so, please leave us a comment below.

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Costco Says Farewell to American Express

June 21, 2016 By Alexa Mason 2 Comments

Seven in 10 Americans have a credit card. Out of that 70 percent, 118 million hold a Visa account. Only 38 million hold an account with American Express. Given these numbers, there is no wonder as to why Costco ended its deal with American Express last year.

The long-awaited Costco-Visa switch took place on Monday. Starting June 20, Costco customers have been able to use their Costco Anywhere Visa Card as well as any other Visa credit or debit card at the wholesale retailer. Visa replaced American Express as Costco’s co-branded credit card and the retailer stopped accepting AmEx altogether on Monday when Costco opened its doors for business.

Rumors of the switch over surfaced in January of last year and were confirmed in February. Business Insider reported that American Express and Costco were unable to reach terms that would have made economic sense for the shareholders of both companies.

According to Costco CEO Craig Jelinek, the reason behind the switch was to continue to reward Costco customers for shopping and for using their co-branded card. “We have a strong relationship with our members and it’s important that we’re rewarding their loyalty to us,” Jelinek said. “Our new co-brand credit card agreement with Citi on the Visa network enables us to offer significant value and benefits for our members across 494 locations in the U.S. and Puerto Rico.”

The Street reported that the new card has significant rewards compared to the former Costco-AmEx credit card. Rewards include 4 percent cash back on gas purchases (up to $7,000 annually), 3 percent cash back on restaurant and travel purchases, 2 percent on Costco purchases and 1 percent on all other purchases.

These rewards are far better than the ones the Costco-American Express co-branded credit card offered. The AmEx card only offered 3 percent cash back on gas purchases (up to $4,000 annually), 2 percent on restaurants and travel and 1 percent everywhere else. The new Costco Anywhere Visa Card has some of the best cash back rewards of any other credit card on the market.

Costco credit card customers received their new Visa cards in May. If customers had rewards on their American Express credit cards, they transferred to the new Visa card on Monday. Costco credit card customers did lose one thing in the switch though. The new Costco Anywhere Visa will not offer roadside assistance like the old co-branded AmEx card did.

The switch from AmEx to Visa has opened up a lot of room for improvement for both companies though. Visa hopes to open more accounts by targeting Costco shoppers. Costco will also see a significant gain through the deal. Three times as many people will be able to use credit cards at Costco after the switch has been made. The company also expects to see an increase in membership signups as well as credit card signups as a result of the switch.

When Costco and AmEx announced the end of their 16-year business partnership, American Express’ stock fell. During the first six months of 2016, AmEx stock has continued to fall. As of June 21, the company’s stock has dropped 11 percent to $61.95. However, American Express officials say that the company expects to see a gain of $1 billion from the sale of its Costco accounts. That is only a fraction of the $10.5 billion credit card portfolio AmEx held with Costco though.

Citigroup received a smaller portfolio than originally expected. When the company received the deal with Costco last year, the portfolio was estimated to have been worth $14 billion. Since the beginning of the year, Citigroup has dropped 18 percent to $42.70. Visa has grown 0.04 percent to sell at $77.31. Citigroup officials have muted their expectations of the deal from the start. The company does not expect to see any significant growth in 2016 due to the deal with Costco.

Have you shopped at Costco with your new Visa card?

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How Will American Express Continue After Costco?

June 13, 2016 By Amanda Blankenship 1 Comment

Last year Costco and American Express announced the end of their partnership. The two companies had been doing business for practically two decades when the decision was made. In addition to ending its deal with American Express, Costco announced that the co-branded credit cards would be replaced by Citigroup-Visa. Costco will now be taking all Visa credit and debit cards, but the company will not be accepting American Express.

Ten percent of AmEx’s outstanding credit card accounts stem from Costco. With Costco and American Express ending their deal next week, many people are wondering how AmEx will stay afloat.

AmEx CEO Kenneth Chenault said that the deal with Costco no longer made economic sense for the company, nor its shareholders. As a result, the two companies decided to split. However, American Express may be the one hurting.

American Express is certainly making moves to retain some of its Costco clientele. The company has mailed out offers to the current Costco-AmEx members promoting its Blue Cash Everyday Card, according to The Motley Fool. It is American Express’ last-ditch effort to maintain some of its borrowers after the switch is made.

The envelopes going out are informing customers that their Costco-AmEx cards will stop working on June 20. AmEx is also offering current Costco customers perks if they choose to stay with AmEx. The company is advertising on the front of the envelopes going out that customers will receive $250 back as a part of a welcome offer once they spend $1,000 within the first three months.

The new card will not have an annual fee. American Express is also offering a 0 percent annual percentage rate for the first 15 months on all purchases and balance transfers. Credit card users will also receive 3 percent cash back at supermarkets, 2 percent back on gas, 2 percent back at select department stores and 1 percent back on all other purchases.

While these benefits are handsome, they are not as good as the Costco Anywhere Visa Card. The new Visa card will be offering 4 percent back on gas, 3 percent back on travel and restaurants, 2 percent back at Costco or Costco.com and 1 percent back on everything else.

Prior to the switch, Costco credit card customers will receive a new Visa card in the mail. When the retail warehouse opens its doors on Monday, customers will be able to begin to use their new credit cards.

If you decide to accept the new Visa card, you can also open a new American Express account and vice versa. To acquire the new American Express card, you will have to make an inquiry on your credit though (which affects your score). People who are receiving the new Visa card in the mail will simply have their AmEx account balance transferred to the new card.

Keep in mind that Costco customers will no longer be able to swipe American Express cards at Costco beginning next week.

Costco’s switch to Visa will be effective on Monday, June 20. Find more information about the switch here, visit Costco’s website or call for more information.

For more info on Costco check out these articles.

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Credit Cards That Give You Your Credit Score for Free

May 19, 2016 By Amanda Blankenship 1 Comment

Your credit score can greatly affect your life. This one simple number can determine what kind of credit cards you are approved for, what your mortgage interest rates will be and sometimes whether or not you’ll get a job offer. It is important to know what your credit score is and be aware of what affect it can have on your life.

There are two different kinds of credit scores: FICO scores and the VantageScore. FICO scores are based on data available from the three credit bureaus (TransUnion, Equifax and Experian). The VantageScore (not as commonly used as the FICO) is based on the same collective data.

Until recent years, the only way you could receive your credit score is if you pay to view it. However, many credit card companies have begun to offer snapshots of your credit score for free. Here are several credit cards that are offering your credit score for free:

American Express

American Express gave its cardholders access to their credit scores online in 2015. When you login to your American Express account, you can select the “My Free FICO Score” in the menu and take a look at your score. The score AmEx uses is based on data from Experian.

Bank of America

B of A not only provides its customers with their credit scores, but it also provides them a 12-month history of their credit. Bank of America also provides its credit card users with credit score comparisons with national averages so that you can compare your score with others throughout the United States.

Barclaycard

Barclaycard offers its cardholders credit score alerts through email. When your score changes, Barclaycard sends you an email to let you know. This feature has been especially useful for people who notice a significant drop in their credit score. With this information, you may want to check and see if someone is using your financial information (if the drop seems unwarranted).

Capital One

CreditWise through Capital One provides its users with access to your credit scores based on VantageScore and TransUnion data. With Capital One, you can access these scores online as well as on the mobile app. You don’t have to be a Capital One customer to use CreditWise though. Everyone is able to access the benefits of this application.

Citi

Citi is another credit card company that provides its customers with credit score updates. It provides customers with the FICO score based on Equifax data. Citi-branded cardholders are able to receive their score online and it is updated monthly.

Discover

Discover provides its customers with their FICO score (based on TransUnion data). Discover offers FICO scores for its customers with the following cards: Discover It, Motiva, Miles by Discover, Escape by Discover and Open Road. It also provides you information about the factors affecting your credit score. You can get your score online and the mobile app. Like with Citi, it is updated monthly (four days before your monthly payment).

Wells Fargo

Wells Fargo has a feature on its mobile application that shows its customers their credit score for free. The company provides its credit card customers with their FICO score (Experian). However, you cannot view your credit score online. You must access your credit score through Wells Fargo on smartphones and tablets.

First Bankcard

First Bankcard offers a free FICO score for its cardholders. It is updated monthly like many of the others and it provides you with the main factors affecting your score.

US Bank

You can view your credit score for free online if you hold a credit card with US Bank. The company provides its cardholders a credit score from Experian directly. Simply log in to your account and you can view your score for free through US Bank.

Walmart Credit Card

You can get a free FICO score if you enroll in electronic statements with the Walmart Credit Card. Like many of the other credit cards, Walmart’s credit services offer reasons behind your credit score.

Photo: Flickr: 401(K) 2012

American Express Will Spend More to Attract Customers

May 3, 2016 By Amanda Blankenship 1 Comment

American Express, which has seen no significant growth in the stock market, is looking to increasing card membership, and quickly. The lender is seeking to reverse its worse stock slump since the recession.

After Costco announced the end of its 16-year-long partnership with American Express, many people have been turning their attention to AmEx stock and what the company is doing to stay afloat after losing such a crucial deal. What are American Express’s plans to keep the business profitable?

AmEx CEO Ken Chenault said that 2015 was a disappointing year for American Express investors, but the company plans to change that this year by spending more money on acquiring cardholders. The company said last month that marketing and promotion expenses increased 19 percent from first quarter. In addition to seeking new members, AmEx is also looking to acquire new retail partners to replace the broken partnership with Costco, which accounted for 20 percent of the company’s loans.

Although the deal with Costco is over, the company holds a partnership with Starwood Hotels. This partnership accounts for about 4 percent of American Express’s total loans and 2 percent of its spending. However, even this deal is at risk for extinction, according to Bloomberg. Starwood Hotels is being bought out by Marriott International Inc., which already has a standing partnership with JP Morgan Chase & Co. and Visa Inc., both of which are the largest companies within their prospective markets.

American Express’s CEO said that the company is focused on doing the best it can for Marriott and Starwood customers during this transition. Chenault pointed out that Starwood does not represent a major portion of AmEx earnings, but if the company loses this deal as well it will be yet another hit to its earnings.

Chenault doesn’t seem to be concerned that the company will be able to achieve a profitable year though. He and his team have refocused their energy on vamping up the company’s lending department to yield a profit for its shareholders this year.

Warren Buffett, whose Berkshire Hathaway Inc. is AmEx’s largest shareholder, expressed that he is not worried about the company though. On Saturday at a Berkshire shareholder meeting, he expressed nothing but confidence in AmEx’s ability to pull out of the stock slump that they are in.

“I personally feel OK about American Express, and I’m happy to own it,” Buffett said. According to Buffett, American Express “has been under attack for decades — more intensively lately — and it will continue to be under attack. It’s too big a business, and too interesting a business.” The major shareholder also said that he supports AmEx’s decision to end partnership with Costco.

At the end-of-day on Monday, AmEx stock was up .38 percent, however, this has not been the norm for the company in recent months. American Express shared have slipped 5.7 percent this year, which pales in comparison to the 28 percent shares have fallen since November 2014 when Costco and AmEx announced the end of the partnership between the two companies in the United States. Only time will tell whether the company’s push to increase AmEx membership will prove to be profitable or not.

Photo: Flickr: AIR FORCE ONE

PayPal: Will PayPal Outgrow Visa?

April 6, 2016 By Amanda Blankenship 3 Comments

When you are looking into stock prices and determining whether or not you want to buy stock in a company, you have a lot of things to think about. Take companies like Visa and PayPal, for instance. It seems that the way that people are paying for things is changing everyday. Visa has been a leader in “a way to pay” since the 1960s, while PayPal is relatively new. However, each has its benefits.

Neither company is struggling like American Express is though. Both of the companies are posting gains, while credit card companies like AmEx are declining in popularity. Why is this happening? Well, the trends point to one reason and one reason alone. American Express is still clinging to the traditional ways to pay while Visa and PayPal are making strides for people to be able to pay differently.

What is the Value of Visa and PayPal?

Over the past year or so, Visa has shown a total return of 20 percent and PayPal has shown to be up 6 percent since July of last year.

PayPal hasn’t been trading all that long as a separate company, however, it seems that it will continue to climb the ladder where value is concerned. If you only take a simple surface look at the cost of each in the stock market, PayPal is seemingly more expensive. PayPal is earning in multiples of 39 versus the 28 Visa is currently sitting at.

Where returns are concerned, Visa seems more expensive. The credit card company’s shares trade at 24 times the earnings estimates, while PayPal trades at 22 times earnings.

Both Visa and PayPal have benefits when it comes to buying shares of the company on a value basis. However, what are the other factors that come into play when looking at these two “ways to pay.”

Visa and PayPal Dividends

When it comes to comparing dividends of each company, PayPal hasn’t returned much capital to its shareholders. However, there is still room for growth (which is exciting for many who dabble in stock).

Visa, however, has the edge over PayPal when it comes to dividends. The company, which has been traded since 2008, only has an edge over PayPal because its simply been traded longer. In reality, the stock only yield 0.7 percent with a payout ratio of 18 percent. This payout ratio isn’t the greatest when compared to other credit card companies on the stock market.

While the payout is less than most other companies, Visa is still paying out a higher dividend than PayPal (which is currently paying zero). However, PayPal is more likely to see growth in the coming years.

Each Company’s Growth

Visa has been able to grow because most people use their cards to pay for things throughout the world. As countries (other than the United States) began opening up to the technology Visa required, Visa has grown. They are continually fighting the international competition though, but have been able to come out with both feet on the ground, establishing a pretty large footprint throughout the world.

When it comes to growth, PayPal is making strides. Statistics from the company have shown increases in the 20 to 30 percent range for payment volume and the adjusted net income. These increases show a PayPal that is ready to gain a greater share of the e-commerce market as a whole. It has also been gunning for companies like Visa with in-store payment processing. The company has revealed it hopes to boost earnings per share as much as half during 2016.

Each company is still growing, though one plans to grow much more than the other in the coming year. It is too early to say which company would be a better buy than the other. However, it may depend on people’s preferred way to pay. Will people be switching over to e-commerce and mobile payments versus a plastic credit card?

Photo: Flickr: (1) frankieleon, (2) richiemontalbo