The Tax-Free B&H Credit Card Is Proof You Should Always Read the Fine Print
Update: Some offers mentioned below are no longer available. View the current offers here.
Unless you live in Alaska, Delaware, Montana, New Hampshire or Oregon, you're used to seeing an additional sales tax tacked on to all your purchases. In some cases, that extra dollar amount can be quite high, too. For example, Illinois — where I live — has a state tax rate of 6.25%. The opportunity to avoid paying those state taxes is an enticing offer, so when the TPG editorial team passed along info about a new save-the-tax credit card offer from B&H, I was intrigued.
B&H is primarily known for selling photo and video equipment, but it also sells plenty of other electronics. I'm a musician, and the retailer's selection of recording gear and microphones means I could save quite a bit of money on my music-related purchases if I decided to open the new B&H Payboo Credit Card. Payboo? Not exactly the greatest name, but nonetheless, it seemed like a great offer. "You pay the tax," the website reads, "and we pay you back instantly."
I decided to investigate. Sure, enough, the website's calculator told me that I would be eligible for a 6.25% savings on products shipped to my zip code in Chicago. That's a sizable return. But is it actually worth it? If you're buying a Sony HDW650F HDCAM Camcorder, perhaps the answer is yes. That piece of equipment costs a whopping $47,819. For me, that would translate to an additional tax bill of more than $2,900. However, let's consider this card for more average customers with average budgets. I dug in to the details to discover that, for most of them, the answer is probably no.
The Benefits Don't Apply to a Big Portion of the Population
The marketing introduction to this card feels like it appeals to anyone, but the asterisk is very important. Here's the fine print — in regular font for your reading convenience — at the bottom of the page:
The tax-equivalent loyalty reward offer is not valid in Alabama, District of Columbia, Idaho, Indiana, Iowa, Nebraska, North Dakota, Vermont, West Virginia, and Wyoming. If shipping to these jurisdictions, enter your shipping zip code here to check for available Payboo Card savings.
The tax-equivalent loyalty reward offer is not available on orders shipped to any jurisdiction that does not require B&H to collect and remit state and/or local sales or use tax (Alaska, Arizona, Arkansas, Delaware, Florida, Georgia, Kansas, Louisiana, Massachusetts, Montana, Missouri, New Hampshire, New Mexico, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, Tennessee, Texas, and Virginia, as of May 1, 2019).
OK, that list includes a lot of places. If you call any of these places home, the card is an instant loser for you. If you're buying a smaller amount of electronics, consider an option like the Bank of America Cash Rewards credit card. You can set online shopping as a category for earning 3% cash back. While that amount is capped at $2,500 per quarter, you'll still earn an additional 1% on all your other purchases.
The Interest Rate Is Insanely High
I know that many TPG readers satisfy the number-one rule of credit card rewards: Never carry a balance, so you will never pay interest. Finance charges can quickly negate any rewards. However, it's no secret that plenty of credit cardholders do pay interest. In fact, data from the Federal Reserve pins collective American credit card debt above $1 trillion. The Payboo card is poised to push that number even higher with another piece of fine print:
**For new accounts: Purchase APR is 29.99%.
As of this writing, the average interest rate for credit cards is 17.72%. For customers who might need a bit of time to pay off expensive purchases like that Sony Camcorder, it is much wiser to find a credit card with an introductory 0% APR offer to avoid that criminally high interest rate.
There Is No Bonus Opportunity
One of the main benefits that B&H is banking on attracting interest is the lack of annual fee. Well, the card also lacks any introductory opportunity to rack up extra rewards. It's important to note that buying video or audio equipment can be a decent chunk of cash — one that is large enough to satisfy the spending thresholds on a number of more versatile cards. For example, spending $3,000 in the first 3 months of card membership would be enough to take advantage of a 60,000-mile bonus promotion after opening a Capital One Venture Rewards Credit Card
Everyone likes the ability to eliminate extra taxes, so the B&H headline will certainly turn some heads. I hope they pause, though, and spend more time doing the math to realize that there are most likely better credit cards for their wallets.