Disney Visa accepting applications on-line!

[roymccoy]

Being a mortgage broker I can tell you that it isn't that great of an idea to get this card just because it's Disney...ESPECIALLY if you're thinking about purchasing or refinancing a home.
Credit cards can dramatically affect your credit rating, or FICO score. When you apply for the card you get what is called an "inquiry" on your credit. If you don't get the credit card, that can hurt your credit. (If there is an inquiry with no credit established after, some say that this can be handled by the scoring system as a turn down which can lower your score.) If you get the card, this is considered "new credit" and it can lower your score for up to a year. If you use more than 75% of your limit on the card, this will DRAMATICALLY lower your score. There is also the addition of the available credit on your report. Banks don't like to see a whole lot of available "unused" credit on a report because they figure that you could run out and charge these up after the deal is done.

I would only apply for this card if you were looking at credit cards and this one looks like it fits your needs. I wouldn't get it just for the hype, or the rewards points or because it looks pretty.
Credit cards are a serious business and I think it's wrong for Disney to be marketing this thing like it's another version of the old Magic Kingdom Card. It is not. It IS a revolving credit card that is underwritten by BankOne (which doesn't have the best reputation in the world among bankers) and is a scam as far as I am concerned.

Just my two cents...

Roy

 

[dzneelvr]

Very imformative, Roy.
We have one card, have always paid off the monthly balance and are not in any major purchase or mortgage mode.
I think I'm ok.
But you're right--this isn't the same thing as a "version" of a traditional Disney club card. It's the real thing.
I hope it doesn't get unsuspecting folks, who are in some of the situations you reference, in trouble. I don't think they'd call that "Disney Magic".

 

[roymccoy]

dzneelvr, it sounds like you should be okay with the card. If you don't have a lot of credit, you payoff your balances monthly and aren't needing to make any big purchases right now, there should be no problem. I see it almost everyday, though, where credit cards either stop a borrower from getting a home loan or at the very least, cost them points or higher interest rates. I don't have a problem with Disney having a credit card, almost every company has one. What I don't like is the way it's now almost the only card that will give you discounts at Disney. No more AMEX discount or Disney Club or Magic Kingdom Club. Now you MUST apply for a CREDIT CARD to get the benefits of those old programs. Also, I don't like the way that they are marketing the cards at the shops and restaurants at DL. The employees are acting like this is another version of the Disney Club Card when it is basically a revolving charge card underwritten by Bank One. I saw them pushing them to a couple of teenagers and it made my skin crawl. Why potentially wreck their credit at an early age? For a couple extra bucks on the bottomline? I think that Disney should have their credit card AND have another program (such as the Magic Kingdom Card) that guests can be a member of that doesn't require your social secuity number and mother's maiden name!

Roy

 

[d-r]

"pushing them to a couple of teenagers"

That is really disgusting.

I hear what you are saying, Roy, and I sure agree with you.

 

[ohanafamily]

Dear roymccoy,

Are they really pushing it as a replacement for the DC Card/MK Card? It isn't. THERE ARE NO DIRECT DISCOUNTS ASSOCIATED WITH IT. There is only cash back in the form of gift certificates. There is some talk about adding discounts, but nothing serious. I even heard a rumor that they are planning a second card for you to use your D$s. Again, nothing firm. As far as My credit cards go, I gave up my "Emergency Card" to get this one, and I also gave up another card that I never used.

If you want more information about how banks rate you on your credit, try going to www.myfico.com. They can run your scores (for a fee) and have tools to show you what effects a new credit card will have. It is a good idea to do even if it is just to make sure there are no errors on your credit reports. You would be amazed at the errors that can be on them.

Again, this card is not the best, it is also not the worst.

I have 3 pearls of wisdom when dealing with credit cards...
1. Don't run up a huge debt on a card, take out a loan if you have to, but the interest rates are astronomical on a credit card.
2. Pay your bill in full every month. The interest rate is astronimical.
3. NEVER GET A CASH ADVANCE. The interest rate is even higher, and is also the last thing to come off of your bill. IE, if you only pay half your bill each month, you will never loose the advance...

JMHO

 

[roymccoy]

I think that they are pushing it as a replacement for the Magic Kingdom Club and the Disney Club. As a matter of fact, when I called the Disney Club to ask about renewing last year I was told that the program was ending BUT there was a new program coming out (the Disney Credit Card) which would eventually offer discounts, rewards points and spiffs.

Also, if you do go to myfico.com and run your credit (which doesn't cause an inquiry because it is consumer ordered) use the "score simulator" and add a credit card (pretend it's a Disney credit card) and see how the new credit pulls your score down. Now, make the balance more then 75% of the limit and watch your score drop.
Remember though, this is only the Equifax "beacon" score. There are three credit bureaus (TransUnion, Equifax and Experian) What we look for in the mortgage loan business is the "mid-score" or the middle of your three scores. Say your scores are 690, 700, 685 then your mid-score is 690. If the best interest and terms are available to people with a 700+ mid-score, then your out of luck. Getting a new credit card can drop your score for a year. Keeping a balance above 75% of the limit can drop your score 30-100 points. (According to how many cards are at or close to the limits).

I have the same beef with Citibank and others that give college kids credit cards WAY to easy. They almost make it out like it's free money to them. Many of my first time buyer clients have a ding or two from a "college" credit card. Disney is now in the credit card business and you aren't going to be able to buy a coke without getting a new card hawked to you. The brochure/application looks colorful, happy, magical and very Disney but it is a revolving credit card from BankOne. It's not fair for Disney to be playing with people's credit like it's pin-trading or a new Magic Kingdom Club.


Roy

 

[roymccoy]

ohanafamily, I hate to tell you this but you fell into Disney's trap. You said that you have replaced your "emergency card" with the Disney card and that you have also gotten rid of another card. Here's how that will hurt your credit.

If the card that you are replacing with the Disney card is being closed by you, this will add the line "account closed by consumer" to your credit. It will also nullify most of the good that you had received from the old card (ie: length of time established, consecutive months paid on time, etc) and you will be converting that to a brand new credit card with No history and no depth of payments. Also, you will be hit by the new inquiry to get the card AND for a year, your score will drop because of the new credit. Now, you will still have your old closed accounts on your credit for 7 years, but since they are not the active accounts anymore, you lose a lot of their benefits, as far as the FICO score is concerned.

Another thing that we look at are the number of "trades" (credit accounts) and how long that you have had them and how you have paid them. If you have gotten rid of your two "seasoned" credit cards for a new Disney card, I might have trouble getting you the best rate and terms on a home loan. Now, if you aren't buying or refinancing in the near future, no problem...but many people will be and will be unaware that this can affect their credit to such a degree.

I know that this will cause problems because a similar situation causes me problems all the time. People are shuffling around credit debt from old cards to new cards because of solicitations in the mail or by phone offering extremely low introductory rates. It looks great on the surface but it does basically the same thing, it trades old established credit for new untested credit and it can add to your "available" credit.

The scoring system also doesn't take into account the "Disney" factor in this. A lot of people will be switching credit cards or applying for a new one just to have a Disney credit card. The scoring system could interpret this as someone getting "over-extended" or getting more credit because they need the money, not because they want to be part of the "Disney Club".

All in all, I would only get the card if you need a credit card or if you aren't going to be making any large purchases or refinancing in the next year.


Roy

 

[ohanafamily]

Roy,

Thanks for your insight, I wish I had you around when I financed my house.

In my case, I would never give up my oldest established credit card unless American Airlines goes bankrupt and takes its milage awards away. My "Emergency Card" got cancelled from inactivity, and the other card was 2 years old that I applyed for to help a friend of mine make her quota. I paid off my house this year and do not intend to refinance in the near future (if ever).

My big complaint about the new VISA is that they are taking away the discounts (DC/MKC) because they "CAN". My credit can handle a little shuffling. A lot of people don't have that luxury.

 

[alabamaalan]

Thanks Roy,

My wife and I use one credit card that we pay off monthly and have had for several years.

I had considered getting the Disney card and closing the account on the other to only have one account active.

However, we hope to sell our home and buy another in the next few months. I feel safe that my credit effect would be negligable since the mortgage lenders we have spoken to have cleared us for MUCH more house than we would ever consider (isn't that always the case). However, I don't want to do anything to make the whole process any more difficult.

I've still never received a notice that the DC is closing! I wonder if I should try to renew?