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As an award traveler, I pay close attention to the wide array of benefits offered by travel rewards credit cards. Today, TPG Senior Points & Miles Correspondent Jason Steele discusses one of the more unique benefits you’ll find: a say in your card’s terms and features.
I cover the entire credit card industry very closely as part of my job, but at the end of day, I rarely see products offered with anything truly innovative. One exception has been Barclaycard Ring MasterCard, which is the most interesting credit card I’ve ever seen. So today, I want to take a close look at this product, see who it’s for, and share with you the conversation I had with one of the people behind it.
Barclaycard Ring basics
Ring is not a travel rewards credit card, which means we haven’t covered it before on this site, and you probably haven’t read about it on any other travel blogs. Instead, this product rewards customers in other ways. First, it offers exceptionally low rates and fees, even compared to most of the other non-rewards cards that it competes against. This makes it superior to most rewards credit cards when you need to carry a balance in order to manage your cash flow. Since about half of all American credit card users carry a balance at least some of the time, this is no small market.
But what really makes the Barclaycard Ring unique is that the entire product is managed in a way that can best be described (if you’ll forgive the buzzwords) as crowd-sourced and open-sourced. Barclaycard releases all the financial data on this card’s user base, including charges made, as well as payments, interest, and fees received. In response, the Ring cardholder community regularly votes to make changes to these policies according to its priorities. Additionally, this card offers “community rewards” that come in the form of cash back or donations to selected charities.
Cardholders can interact directly online with Barclaycard’s product manager Jared Young, as well as its two other community managers Jen and Kati. Consider that for a second. Unless you’re one of a bank’s most important customers with a private banking relationship, it’s unheard of that you can regularly interact with real humans who have sway at a major credit card issuer.
Rates and fees
Since much of the appeal of Barclaycard Ring is in its terms, they’re worth exploring. The standard interest rate is 8.25% APR — not 7.99% or some number between X and Y depending on your credit history, just 8.25%. Like nearly all credit cards, Ring has a so-called variable APR because it rises with the Prime Rate, even though it hasn’t changed during the last six years. The APR for balance transfers and cash advances is also 8.25%. Most importantly, there is no penalty APR.
The cash advance fee is a flat $3 per transaction, which I have never seen before in any other card. Ring used to charge a 1% foreign transaction fee, but has now joined the club of cards that offer no transaction fees, putting it way ahead of the 2.7% or 3% commonly found even on some popular rewards cards. The annual fee is $0, and there’s no balance transfer fee.
The Barclaycard Ring community
Ring cardholders comprise an online community that can not only pose questions to the card’s product managers, but also propose new ideas to improve the card that get voted on by the community. Since Barclaycard opens up the card’s financial data to the community, members can see how their changes affect the product and its profitability.
The Giveback program is the card’s transparent way of returning a portion of the profits to charity. Currently, Barclaycard sets a “hurdle” of a 2.25% annualized return to cover its marketing expense, taxes, and return to shareholders. After that hurdle is surpassed, 20% of the remaining returns are donated to the Giveback program. This is a recent change from the previous hurdle of 3%, which was followed by a sharing of 70%. Since that formula didn’t result in a high enough anticipated Giveback, it was changed. You can read about that process in a blog post from product manager Jared Young, which I think offers a sense of how openly this card is managed.
Speaking with Jared Young
Having met Jared at a financial bloggers conference, I had the opportunity to explore this unique product a little more in depth:
What were your goals when creating Ring?
“We wanted to create a product that put the customer at the center. All of the trends in the market were pointing towards consumers being more empowered. So we wanted to hand them the keys. Social networking technology has created platforms that make that possible. But also we wanted to see if giving customers this level of control could actually change their behavior in mutually beneficial ways. If that happened then we had a disruptive concept on our hands.”
What challenges did you face in bringing this product to market?
“The biggest challenges were related to legal and compliance because we wanted to have a very open and transparent dialogue with our customers. If they are going to be empowered they need to be able to ask questions and get answers. That is something that banks have not historically done and so we (my team and the Legal/Compliance teams) had to push that line out a ways and get comfortable with how we were going to get there.”
What are some examples of changes made to the product as a direct result of community input?
“The clearest example is changing our late fee policy as a result of community input. But they have given us great feedback on the card design, other elements of the fee structure and the website itself. The community also drives where the Giveback donation goes to.”
Is Ring right for you?
If you are looking for yet another travel rewards card, Barclaycard Ring isn’t it, and you should instead check out TPG’s top card offers for April. But if there’s a portion of your spending that you dedicate to travel rewards cards (like business travel that’s reimbursed by your company or client), and/or an amount that you may have to carry a balance on, then this is one of the best cards you can have for the latter purpose.
The 8.25% APR (for purchases, cash advances, and balance transfers) is among the lowest non-promotional rate available from any card issuer, and its stunningly simple fee structure makes this card easy to manage.
This is also a great card for people who prefer a personal touch to their banking, and who would like to be part of the community that shapes a product. The closest analogy I can think of is the outdoor equipment retailer REI, where customers can become members of the co-op, enabling them to elect board members and receive an annual dividend. If this type of business model appeals to you, then Ring may be your kind of credit card.
Finally, if you’re a hard-core travel rewards enthusiast who never plans to carry a balance, you may be the type of savvy credit card user that your friends and family members look to for advice. If you know someone who’s dissatisfied with the relationship he or she has with credit card issuers, and is looking for the best rates and fees, then Barclaycard Ring might be a better fit for them.
Chase Sapphire Preferred® Card
|Intro APR||Regular APR||Annual Fee||Foreign Transaction Fee||Credit Rating|
|N/A||16.24%-23.24% Variable||Introductory Annual Fee of $0 the first year, then $95||0%||Excellent Credit|