Credit Card Rewards And Incentives

Note: If you can't decide which card to go for, there's a never ending selection of credit card rewards and incentives on offer. But the lure of a free dvd player could cost you money.

So at this stage I think that I should say a few words about the credit card rewards and incentives that are operated by lenders. The list of items to tempt customers is never ending;

• No annual fee
• Cash back
• Loyalty points at certain stores
• Air miles
• Longer interest free periods
• Donations to charity every time the card is used
• Free points so that you can receive a range of goods such as ‘free’ tickets to entertainment events, or a selection of ‘free’ plastic rubbish such as CDs and DVDs etc. etc.

Whatever offer you may be tempted by, bear two things in mind.

Terms and conditions

There are fewer reasons than ever for the rate of interest charged on credit cards to be anything more than reasonable. All the conditions point towards lower costs. Official interest rates have fallen steadily in recent years, competition is much greater due to the massive number of lenders jostling for business and the internet has helped to cut business costs. But have the credit card companies followed suit?

No!

Their rates have remained roughly the same, but they have bundled their cards with a range of promotions to ‘lure’ customers away from each other.

Well pardon my attitude but if you spend $10000 per annum on a credit card, who wants a range of CDs/DVDs, free or not, as compensation for having to pay an appallingly high rate of interest?

The moral of this tale is not to be blinded by all the exciting looking promotions when deciding which credit card offer to accept. They’re just part of an elaborate trick used by the industry to make it look as though you’re getting something for nothing.

Make sure that the overall terms of the card, such as the rate of interest and the length of the interest free period are not poorer than normal just to accommodate these superficial little ‘extras’. The main determining factor should be your circumstances and the offer that suits them best.

And remember: Unless the entire balance on your card is paid off in full each month within the interest free period, any slight consolation in the form of these ‘extras’ will be completely wiped out.

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