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Analysis: Is it worth getting an Internet credit card?

MacWorld Online

(IDG) -- Credit cards and the Internet were made for each other. After all, you can't spend cash on the Web. Without the convenience -- and security -- that credit cards offer, and eBay would have never made it into cyberspace.

You might think it's perfectly acceptable to use the same old credit card for shopping on the Web that you've always used. Of course, you may have never gone to business school. There you would have learned that marketing abhors a vacuum. That's why you can now apply for a special kind of credit card that purports to be "optimized for the Internet."

So what makes an Internet credit card different from any of the other cards in your wallet? And what do these cards have to offer for Mac users in particular?

Let's give cards credit

First of all, let's give credit cards their due. In a way they're like alcohol -- fine and possibly even beneficial in moderation but disastrous when abused. If you rack up lots of impulse purchases or carry a regular balance from month to month, then any kind of credit card -- Internet or otherwise -- is a short cut to financial heartburn. That said, credit cards nonetheless offer distinct advantages for e-commerce shoppers over other forms of payment. They're certainly more convenient than paying by check.

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Although a lot of people worry that credit cards pose a security risk, credit cards are actually safer than the increasingly popular debit cards that deduct money directly from your checking account. That's because the law limits consumer liability for unauthorized credit card purchases to the first $50 of charges incurred. That protection isn't mandated for debit cards. Consequently, you could lose a lot more money if your debit card number falls into the wrong hands.

Internet plastic

But all real credit cards offer the same basic advantages for e-commerce. So why would you want an "Internet" card? After all, they don't offer better interest rates than what you could get with a nonwired card. They do, however, offer various special features.

Extra security: First (and for Mac users, probably the most important) are the security features of the card. Any good Internet credit card will address the fears of online shoppers. The easiest way for card providers to do this is to promise to cover that first $50 of loss in case your card or card number is stolen. Since card providers aren't legally obliged to do this, it's a good value-added feature, and I wouldn't accept a card that didn't offer it.

Consumer protection: Another way that Internet credit cards can help online shoppers is by offering a "safe shopping" guarantee -- which comes in handy if you find yourself shopping at Web sites that may or may not have reputable businesses behind their URL. You should be allowed to return any merchandise bought with these cards for a refund. Also, these cards should protect you by promising to refund any money you lose due to fraudulent Web-site companies that don't deliver merchandise or that vanish along with your money.

Account management: An Internet credit card should allow you to examine the details of your account online, including your current balance, recent transactions, and previous statements. You should also be able to save statement details in an importable file format such as QIF so you can transfer it to Quicken. At least one card (NextCard) lets you set up account alerts that send you an e-mail message whenever a charge is posted from a certain merchant or for a particular amount. If you think that's more monitoring of your card account than you need, you've probably never given a credit card to a teenager.

Shopping: Most Internet cards offer special shopping features such as preferred-merchant discounts and shopping-comparison agents. To me, these are the equivalent of those irritating, glossy ads that piggyback with your paper account statements. I'd rather use a standalone shopping agent such as mySimon.

Wallets: Internet credit cards are revitalizing the e-wallet concept. This is usually a separate program that makes it easy to fill in Web forms with your payment and billing information. I actually find this pretty useful, but unfortunately, so far as I'm aware, none of the card providers has seen fit to make any of their e-wallets Mac-compatible. This oversight will be addressed soon, I hope.

Online applications: This is another area where NextCard pioneered and the rest have followed. It's the feature that the card providers themselves are most fond of. If you need to get a card in a hurry, NextCard will let you know literally within minutes whether you meet the grade and, if you are approved, let you start charging right away.

That's neat, but it's also a reflection of just how easy it is to inspect your credit worthiness with little more than a social security number and a mailing address. Think about it. Just about everyone else at least lets you apply online, although you might have to wait a few weeks for an answer. Frankly, I don't see the big advantage to the consumer here, except that it's a lot faster to apply for a NextCard than it is to fill in one of those paper forms that asks for the address of your last three residences. On the other hand, one could argue that applying for credit cards shouldn't be too easy, for the applicants' protection.

Worth it or not?

At this point, it's still a toss-up whether an Internet credit card is worth getting. Most of these cards have no annual fee, so there's no harm in getting one if you're careful not to use it indiscriminately. And if you do a lot of e-commerce, it's a good idea to have a card that will cover you with full fraud and return protection. I've had both an American Express Blue card and a NextCard for almost a year, but I admit that I never bother to use the account-management features or shopping features of either one. The card I have from my own bank is easier to keep track of via online banking than importing QIF files would be.

In the future, I expect that the idea of Internet credit cards will fade as the features that now distinguish them become integrated into all credit cards. Certainly, I'm looking forward to the day when the credit card I get from my own bank offers all the bells and whistles of the fancier Internet varieties -- including a Mac-compatible wallet application. Until then, I'll keep my plastic plain.

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Infrared payment technology on tap
(Network World Fusion)
Study peers into world wide wallet
(The Industry Standard)
Digital signatures create market potential
Online shopping: Boosts and bumbles
(The Industry Standard)
Digital wallets: Boon or bust?
(The Industry Standard)
PrivaSeek e-wallet protects privacy
(Network World Fusion)
Secure yourself with an eWallet
(PC World Online)
Transaction fees becoming important in e-commerce
(IDC Research)


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