A reader requested an exploration of the credit card offerings in Bermuda for Bermuda residents. Sir, we thank you for your interest. The credit card world is complex, large, and more than a bit confusing. Reviewing content was one of the more frustrating research topics I’ve attempted recently.

Surprisingly, there are many individual card offerings, even in this small jurisdiction. Each financial institution’s website advertises their offerings differently. Some important components had to be retrieved from other unlinked sections, such as the very important lengthy legal contract set of terms and conditions, making comparisons on the basic criteria very difficult.

In some areas, there simply was not enough information. Ideally, there should be a uniform set of credit card criteria presented in the same format by all financial institutions. Wishful thinking on my part.

Nevertheless, perseverance produced a report. It will be up to you to judge whether I’ve given you any help in understanding the most popular, some would consider the most important, financial product of the twentieth century. Hopefully, readers will be able to use the chart as a guideline for selecting their own credit cards.

Numerous factors make holding credit cards in Bermuda unique.

­— Limited number of financial institutions thereby providing limited competition. This may be a matter of perception, as we shall see.

— Bermuda dollar-denominated cards — an amazing feat for such a tiny island.

— US dollar denominated cards requiring currency conversion to Bermuda dollars (and vice versa) at point of entry or exit at every usage. US domestic credit card holders do not experience this higher cost issue.

— Bermuda residency required.

The comparison chart enclosed lists the most common features and fees for one type of credit card offering from our four major banks: annual percentage rates, penalty and overdraft fees, foreign currency transactions, minimum payment requirements, beneficial rewards and the like. Further detailed comparisons will be your initiative to assume. You have to decide what you want your credit card and your bank to do for you.

Further, to make the comparisons less insular and more interesting, I’ve also enclosed a credit card offering list from one of the largest United States national banks.

Credit card interest rate charges. In review, we see that overall, annual interest rate charges appeared to be range bound. Readers (and anecdotal comments) complain that credit card interest rates and fees are high (and less competitive) in Bermuda, but in perusal, you will see that United State rates and fees are on a comparative scale.

The US bank goes even further to define the interest rate charge individually by predicating the rate on the applicant’s creditworthiness. I think this is a great incentive to encourage families to manage their finances.

Naturally, the higher that an individual’s credit limit (and credit approval rating) is, the greater privileges provided in lowered interest, cash rewards, points, waiver of foreign currency purchase tax, offers to roll balances into lower rate cards, and travel insurance premiums. Minimum monthly payment terms were not located for most of the banks, while some appeared to link reliable payments to being in good credit standing, or other credit worthy fact patterns. Readers are encouraged to use the web calculators listed on last week’s article to track their payment balances to avoid the minimum payment trap.

Penalty and overdraft fees per event appeared competitive across the spectrum. The US bank linked overdrafts and late payments to increased monthly interest rate charges up to a whopping 25 percent annually — punitive indeed.

Annual fees are incurred on some offerings, but not others. These appeared to be tied into incentives and rewards depending upon the specific card requested.

Our reader asked: “Should I set my card linked to a US dollar or UK sterling account, so that I can control the foreign currency conversion fee?”

The biggest beef among Bermuda credit card users, besides interest rate complaints, is the multiple charges (conversion fee, commissions, and handling charges) assessed on foreign currency conversion.

Based upon discovery, these fees are not unique to our jurisdiction, reaching across the pond — see including high charges by the US bank. In some accounts over the years, readers report that both sides of the credit card transaction banks have assessed foreign currency transaction fees.

Our reader’s suggestion makes fee sense. If you have the time (and I ran out for this week, but will investigate further), suggest that you consider this option. It may be cheaper to convert Bermuda dollars in larger amounts to other global currencies all at once in your personal bank accounts rather than incurring higher piecemeal charges on every small transaction.

Note, however, some plans charge a foreign currency fees based on a percentage of the balance being translated, not a standard flat fee.

Can you obtain a credit card with an overseas bank where competition is much more aggressive, making rates lower? Your author spent some interesting time on various US large bank websites. There are two answers to this question.

1) Rates may not necessarily be lower, just for starters.

2) The answer is yes, but only if you have a United States social security number, and a valid United States legal address, not a US post office box. US banks request declaration of your citizenship(s) as well, nor can you apply online for a card without proof of the above.

Cross-border financial planning caution. The US legal address qualification has become a serious stumbling block (otherwise defined as Fatca fallout) for US citizens living abroad who are long-term permanent residents of another country. In many circumstances, their foreign bank has declined (closed their accounts) to carry them as customers, and domestic United States banks don’t want their business either because these individuals have no permanent United States home.

Finally, credit card offerings (and usage) are heavily tied to maintaining good credit relations across the board. If you don’t want to spend the time comparing rates, fees, incentives and other benefit programs, then common sense should prevail.

Every purchase decision should ask the question. “Can I afford to pay cash?” If you can’t — do not, do not buy anything on credit. If you must use your card for the convenience of not carrying cash, pay your credit card balance in full every month. No fuss, no problem. And you can ditch this article because you don’t need it!

Next — in a few weeks. Credit card / debit card usage has changed the way we conduct our financial lives. Scams, identity theft, bankruptcy issues, understanding calculation computations, electronic reporting, rewards and incentives, instantaneous gratification, long-term dissatisfaction patterns discussions.

Martha Harris Myron CPA CFP JSM Masters of Law: International Tax and Financial Services, appointed to the Professional Tax Advisory Council, American Citizens Abroad, Geneva, Switzerland. President, The Pondstraddler Life™ Consultancy: international financial planning, publications, presentations for the challenging lifestyles of multinational individuals and their families residing, working, crossing borders, and straddling ponds in the North Atlantic Quadrangle. Specific focus for residents of Bermuda, the premier international finance centre. Contact: martha@pondstraddler.com