Loyalty Credit Cards

How Loyalty Credit Cards Save Money in 2009

Loyalty credit cards, mostly known as rewards cards, were created as a wise marketing step to make consumers spend more aggressively. The idea of loyalty programs was to give you some kind of rewards, points, cash back or miles for using your plastic at your favorite merchant.

It looks as a mutual benefit deal but in fact your company may make thousands on your spending, whereas you may never get the actual value of rewards. The crisis makes things worse.

So how do you avoid the traps associated with rewards cards use and save with their loyalty programs in 2009? It requires some time to do homework and analyze what you earned in 2008 and how the loyalty schemes and your personal spending habits have changed by now.

There are a few simple steps to help you use the benefit of rewards towards better financial performance in 2009.

First, create a loyalty annual report for all winnings and earnings made in the previous year. Sum up everything, not just how much cash back or miles you've collected, but also such perks as gift cards from department stores or free cappuccinos from your favorite coffee shop.

All together the earnings may add up into a pretty penny as long as you do not spend just for the sake of rewards or carry balances on your card. If there is a balance you pay interest on, the interest may eat up the actual value of the earnings.

Second, count the earnings and estimate the benefit of the rewards you deployed. Rewards don't count if they rest in your account because you may lose them any time due to the expiration date or change in the rewards program's terms and conditions.

Such loyalty annual report will not only show the grand total of earnings in 2008 but will also uncover your spending habit and its changing, if any, throughout the year. So the third and most important step is analysis. Analysis of your spending behavior, earning goals and changes in rewards programs is perhaps the key to a more rational card use in 2009.

If you have started your own small business, you need to consider the latest offers in business credit cards or frequent flyer cards (if your business requires frequent travel). If, on the contrary, you gave up airline miles for their being too expensive and more difficult to redeem, you may look at cash back offers. Owning to the enormous number of online services featuring the latest credit card applications, you may easily switch onto a new deal which looks more profitable for you this year. Anyway, before you decide to apply online, compare what you've earned to what you can potentially earn with another loyalty scheme. Your loyalty annual report will be of great help.

Start saving with cashing in every reward which wasn't deployed in 2008. It may help you get some extra cash or even free merchandize depending on the type of rewards. Each reward earned through the diligent and rational card use promises to save your money in the new year.

Jennifer Brown

Jennifer Brown, an external business consultant working with a Fortune 500 company, has years of experience to her credit. Despite having a busy schedule through the day, she takes time out to write articles dealing with credit cards, payday loans and other financial aspects. She has completed her Bachelor degree in Financial Services from Columbia University and has been actively involved in various activities for the betterment of society.