Friday, January 20, 2006

Emigrant's Crappy Cash Back Card

Gee, just as I was getting all excited about the new Emigrant Direct Cash Back Mastercard I notice that "America's Highest Cash Back" rate of 1.25% is asterisked. Huh. Check it (emphasis mine):
"This rewards program is the highest U.S. credit card cash back only rebate program because it offers a 1.25% cash back rebate on all net retail purchases. As of January 19, 2006, other issuers may offer higher percentage rebates but require minimum spending thresholds before higher rebates are applicable and/or limit the higher percentages rebates to certain types of purchases. The 1.25% cash back is contingent upon maintaining a $10,000 average daily balance in the American Dream Savings Account for the preceding six months. Other restrictions apply. See Terms and Conditions for more information."
And if you maintain less than $10,000 the rate is America's Lowest Cash Back of 0.50% AND from the fine print it seems they only "review" your account every six months. Oh...and they only make two reward deposits a year, yaddy yaddy yaddy. Even when I do get to $10k in savings, I doubt I will keep ALL of it at one of these online savings banks.

The APR for purchases for folks with the best credit is prime plus 5.99% (currently 13.24%) which seems high to me. If you don't carry a balance, it won't matter...but if you do carry a balance do yourself a favor and find a lower rate and forget about the rewards.

I think this is a crappy deal that will truly benefit very few people. If you have had, or soon intend to have more than $10,000 in cash at a place like Emigrant long-term and are already maxing out the limits on your other credit cards that give you 5% on some purchases then have at it.

Personally, they'd have to pay me to sign up for this card. $100 seems fair.


  1. so they finally came out with the card eh? hmm that is indeed a crappy deal.

    if they kept up with the rates in their online savings account, then I dont mind. but they're not keeping up with the current rates.. bleh.

    I remember they use to claim America's highest rate* etc. too

  2. I will be sticking with my Citibank card since it pays a higher %. If I get close to the $300/yr limit, I might consider getting another reward card.


  3. You said it all Caitlin! I don't think I'm even going to blog about it, it was so disappointing. They had a chance to shake up the industry, but probably figured out it wasn't profitable enough.

    It's annoying to have a very simple savings account tied with a credit card with so many catches.

  4. Seeing how ING Direct and now Emigrant Direct are struggling to come up with some catchy marketing deal makes me wonder - How hard are they willing to fight to attract and retain customers? Have the recent rate wars been hurting them? Are people saving less and putting more money in the market? And the most pressing question - How will HSBC respond to all this?

  5. We've been waiting since the fall when EmigrantDirect said the card would be in our hands on Thanksgiving. Now this? Not worth it.

  6. At the 1.5% I'll end up with about $1500. Is there a better card out there with cash back, with no limits?
    I don't want sky miles or credits toward GM cars etc. , just cash..

  7. haha, yeah right, this is the best deal on the planet, why would you have your savings anywhere else? and if you don't have 10k savings, why would you be spending enough for it to matter what small rewards you'd be getting anyway.

  8. Yeah there are much better across-all-categories cash back cards than the Emigrant one (e.g. Fidelity's).

    However, solving the generalized problem of maximizing your annual cash back reward with the right card or mix of cards is challenging because the cash back reward you can earn from credit cards depends on your particular spending profile -- especially how much you spend in various categories (e.g. gas, grocery, restaurants, utilities, etc.)

    The calculator tool at Credit Card Tune-Up: Maximize Your Cash Back Rewards ( makes choosing the best cash back card (or mix of cards) easy. Given your spending pattern, it calculates your expected annual rewards for each of the leading cash back credit cards and even for your best mix of cards.

  9. Most established families need an emergency fund in the neighborhood of $30K. Although not 100% of that needs to be immediately liquid, $10K sounds about right, with the remainder in a short-term bond fund, or short-term CDs (laddered). Given that Emigrant Direct offers relatively high rates, this actually seems like a good deal to me.

    caveat: I don't have any connection with Emigrant Direct. My emergency fund is in Vanguard's Prime MM.


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