At MagnifyMoney, we want to help create a simpler, cheaper and more transparent banking system. Part of that mission means finding ways to praise products that remove complexity, while punishing those products that add layers of fine print and confusing terms. In order to make it easy for our users to sort the good from the bad, we created the MagnifyMoney Transparency Score.
We have a very simple approach: the more fees, fine print and complexity, the lower the score.
We have made a small change to the Transparency Score for our Balance Transfer Credit Cards, and we wanted to explain that change to you today.
For a balance transfer credit card, we look at 3 areas in order to determine the grade:
- Fees: the more fees your charge (for example – late, over-limit, foreign exchange), the lower your score
- Interest Rates: we don’t like when credit card companies say that your interest rate can be anywhere between 2% and 30%. And then you have to apply for the credit card (which means you accept the terms), only to be told your interest rate after you have been accepted. So, the wider the pricing band, the worse the score. So, someone who offers 9.99% – 15.99% would be rewarded more than someone who offers 4.99% – 22.99%, because you have a better indication of your interest rate before applying.
- Marketing: we believe that the key terms should be clearly disclosed in the marketing message, and not hidden in the fine print. The easier it is for us to figure out the terms and conditions, the better the score.
These 3 pillars of our score have not changed. However, we have tweaked our highest score, which is an A+. We will award an A+ to a credit card if:
- There are no “junk” fees of any kind. That means no balance transfer, late, over-limit, returned payment or foreign transaction fee can be charged. This remains the same as before.
- The marketing message clearly identifies the terms, which also remains the same as before.
- We have tweaked the criteria for pricing. Before, you could only receive an A+ if you had a single price point disclosed up front. However, we recognized that by limiting the price points, we will only ever give an A+ rating to a card that targets people with the highest credit score. So, we changed the criteria so that you are eligible for an A+ if the range of possible interest rates is fewer than 10 percentage points.
We still hope that banks and credit unions will provide more transparency on pricing before people apply.
At the moment, there is still only one credit card that meets this criteria: PenFed Promise Visa® Card. We applaud the simplicity of PenFed Promise Visa® Card, and we hope that other products will join Promise over time, as the banking system becomes simpler, cheaper and more transparent.
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