How to Choose a Credit Card Deal with the Right Bonus
11/30/2007 | Credit Card Rewards
Today's competition on a credit card market is really keen. In order to extend a client base credit card companies develop new marketing strategies and promote their production. Credit card issuers are ready to do nearly everything to win the fight for another credit consumer aiming to increase their profit. So, how do they claim your attention? Right, they offer you various bonuses and reward programs.
But you need to be extremely careful when it comes to a reward card's choice. It is so easy to get misled by overwhelming amount of credit cards ads that flood your consciousness with tempting terms and perks. Do not try to find a grain of truth in advertising folders. They are just like colorful wrapper on your Christmas gift. No matter how bright and fancy it is you never know what you will find inside the box. It might be the latest smart phone model you have been dreaming of or a pair of wool socks.
The same goes for credit card bonuses. You can get so much involved in the chase after a greater number of perks that you will not even notice how essential card's features slip your attention and you sign up for a far not beneficial deal.
Comparing credit card offers with rewards you should pay attention not just to bonuses that come with the deal, the first point to turn your eyes on is credit card's rates and fees. In case you give your preferences to enticing rewards and skip the lines informing you about credit card's charges you will most probably face problems with paying off your debts.
Rewards can be divided into two major types. Rewarding points and cash rebates. Points reward programs were developed earlier than cash back. The system of earning points and redeeming them for some products by definite brands afterwards spreads on air miles, gas rebates, and hotel rewards as well.
The cash back feature was introduced by Discover some time later. When it comes to cash rebate we face a kind of contradiction. While this type of rewards program is the most popular with credit consumers, banks are more likely to issue card deals with reward points. The reason is not so hard to figure out.
In case with points you will need some time to earn them and only then a credit company will give you a reward you are eligible for. This way a creditor saves their money in a way through putting off the due date of giving out bonuses you earn. During this period they make profits on the interests you pay.
As for cash rebate, credit issuers have to give a part of the money you have spent back. In this situation they have no loopholes to make some extra profit on you.
However, even owners of points reward programs are not protected from delays in getting your bonuses. Credit card issuers are not very willing to give out, say an airline ticket you have saved up enough points for right away. So, sometimes you even risk spending your planned out Christmas holidays on Hawaii in February or March.
You also should remember about deceitful policies some credit card companies follow. They add hidden expenses to your credit card deal. So, after a couple of years of enjoying your rewards and reasonable charges, your low interest rates and fees skyrocket just out of the blue. Another dishonest practice is a requirement to make extra purchase to get an access to your bonuses.
But do not rush to tear all rewards credit card applications apart. There are some ways to outwit your credit card issuer. Receiving a quick sign up for a reward card and closing the account before the first year is up is a really good way to benefit from a deal. And the most reliable method of staying out of rewards' traps you might get into is reading carefully the fine print.
As you see, rewards credit card deals have several catches for you in store. But that is quite natural. As long as credit issuers and credit consumers' interests keep colliding, both sides will keep looking for new tricks to win the fight for profits.
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Comments
corben, 05:12 AM, December 12, 2007
personally, I've never cared about these bonuses and never used them. Credit card is MONEY, and when someone just wants to give you money (or something not taking money), it's just suspicious.
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