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Credit Card Applications » News » Other » Rewards Credit Cards Pitfalls

Rewards Credit Cards Pitfalls

July 12, 2007
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Cautions When You Apply Online For a Credit Card With Rewards

When you apply online for a credit card there are a number of different things that you need to take into consideration. Anyone can just apply for credit cards left and right but really it is the people that take the time to do research beforehand and figure out exactly what they want in their credit card that are going to have the most success with their credit cards. There are issues with impulsive purchase behavior with credit cards and because of the internet it has become much easier to get online credit card approval at lightning quick speeds. There are issues aside from responsibility that play into the decisions to fill out specific credit card applications online and many of those issues are about the quality of the credit card itself. Reading the fine print and researching the different competitors are both important aspects of finding the right credit card and if you fail to do either one of them then you might end up in a situation where you have bad credit cards with contracts that have entrapped you for a long period of time.

This is especially true of credit card rewards. With the large number of reward programs available for people to use nowadays there are always going to be differences in quality and in quantity.  It is the people that are able to take advantage of these differences that are going to be the ones that succeed in the long term. Understanding the differences between the competing credit card rewards and then capitalizing on the differences that directly benefit you in your current frame of mind is definitely the way to go about doing business with credit card rewards and the rest of this article is going to show you the different things you need to keep in mind when you make these kinds of considerations.

Quality Issues Of Credit Card Rewards

In the introduction it was mentioned that there were both quality and quantity issues with a number of these credit cards and while that is completely true it is necessary to distinguish between the two in order to have a greater understanding of how the differences can apply to you. Quality issues are issues that have nothing to do with numbers whilst quantity issues are obviously different. When you are looking at different credit card rewards you need to be acutely aware of the following quality issues.

Introductory Terms: One quality issue that a number of credit card rewards fail miserably on is the concept of an introductory period. A number of credit cards will offer some amazingly attractive terms that will make you want to apply online for a credit card right away but make sure that you take the time to read fully about everything that the credit card provides. If the great terms are only for an introductory period then find out what the terms become after the introductory period expires. If the terms become horrible after the introductory period then the card is effectively useless to you, regardless of how awesome the introductory terms might be.

Freedom: Another important thing to keep in mind when dealing with credit card rewards is the idea of freedom. Many credit card reward programs are not based on a cash back but rather are based on points. A good example of this is the airline miles cards where the points are stacked up on your card and you can use them to get yourself a plane ticket or even a whole vacation if you’ve got the points for it. When you consider the different credit card rewards available out there the concept of freedom simply translates to the flexibility you have in using your points. A cash rewards credit card offers the most freedom since you get the cash and can use it in any way you choose but at the same time a very good gasoline card that gives you discounts at all the major gas stations is also a great thing to have.

Quantity Issues of Credit Card Rewards

Interest Rates: The thing you need to understand about credit card rewards is that it is not free money for doing nothing. The concept of free money needs to be banished permanently from your vocabulary the moment you start dealing with a credit card company. They are only in it for what they can get out of it and the sooner you come to that realization the better it will be for you. In order to make up for the money lost in credit card reward programs they will do other things like raise the interest rate on the credit card. 

Fees: Credit card reward programs often carry very many fees with them. These are once again to help the credit card company offset the money lost through providing the credit card rewards in the first place.

Ratios: The conversion ratio of points or money to actual amount of credit used is a very important quantitative consideration in the usage of credit cards. This ratio needs to be as low as possible so that you can get the most out of using your credit card rewards.

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