Credit Card Reward Game

Playing the Big Game with Rewards Credit Cards Issuers

How many credit cards are their in your wallet? What do you use them for and do you carry balances on them? These simple questions show whether you can qualify for rewards credit cards and how well you can play the big game with the credit card issuer.

Once you apply for a rewards credit card, you join a big and risky game of drawing credit company's interest over to your side. What interest are we talking about? The interest of making more revenues from keeping you paying high-sky rates and fees of rewards credit card or just cutting down the rewards. In both the cases the lender wins.

However, there are some lucky and credit smart customers who venture to play the credit card rewards game and, following the right tactics, they come out as winners. The number of such cardholders is still rather small and credit companies are taking all the possible measures to prevent their spreading.

Why do credit card companies renounce the rewards they initially offered in their credit card application? Why is the amount of cash back reduced and why are frequent flyer points so hard to redeem?

The answer is simple. Credit companies give up any of their programs if it does not bring revenues. Wisely used credit card rewards have recently made up a segment that is too expensive and even unprofitable for the lenders to maintain.

Customers who have decided to join the game have worked out firm rules of managing rewards credit cards right, and the issuers started to lose revenues. Let's have a look at these rules which are as valuable as interesting, considering that rewards cards have often been one of the most effective ways of taking a customer to debt.

• A wise and provident customer who hopes to earn and redeem credit card rewards knows it beforehand that carrying balances is not the right strategy. To be more exact, it is utterly intolerable with rewards cards. APRs on such credit cards are so high that once you miss a payment, all that you earn later on will never make up for what you've paid in interest.
• The most gaining cardholders are those who spend big amounts on their credit cards. The more dollars you spend, the more point rewards you usually get. If you charge little, a reward credit card becomes useless piece of plastic.
• Customers who want to make sure they get a reward in the long run get a cash back credit card. Just imagine that paying at certain retailers with the Chase rewards card or a Discover card, you are eligible for a 5% cash back which can be claimed or added to your credit card account.

When a credit cardholder sticks to these rules, a credit card company begins to lose revenues. That is the reason why creditors are cutting off cash back from 5% to 2% or toughen the terms for redeeming earned points for a free airline ticket. Or they jack up APRs or charge huge annual fees to compensate for losses.

In any case, there is a golden rule for rewards credit cardholders - paying off the whole balance every month, you do not pay extra in interest and thus, there is always a chance that you will be rewarded as generously as you spend.

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.