The first quarter of 2011 saw some 1.4 billion solicitations sent out by credit card issuers, in an attempt to attract new creditworthy applicants. According to market research firm Mintel, as reported by the Kiplinger website, the bulk of those credit cards offers were for cards with rewards programs. About 80% of them, in fact. Some lenders are going so far as to extend cash bonuses as incentive to sign up. The days when card issuers rewarded applicants with giveaways such as t-shirts or candy seem so long ago now.
But credit card companies aren’t sponsoring rewards programs simply out of the goodness of their hearts. It’s been proven that consumers spend more on plastic that has a corresponding rewards program attached to it than on cards that give nothing in return. So, because most banks have done away with debit card rewards programs because of the Durbin Amendment’s soon-to-be instituted cap on debit card swipe fees, offering a wider array of credit cards with rewards programs to choose from goes a long way towards encouraging consumers to swipe a credit card at the point of sale in lieu of a debit card which means more money in interchange revenue for the bank.
One of the dangers of using a rewards credit card is the temptation to overspend to rack up more points. Even though the APR on rewards cards dropped a bit and the average now sits around 13.9% according to Kiplinger, that can lead to a tremendous amount of interest accruing if cardholders aren’t disciplined enough to pay off the entirety their balance at the end of each billing cycle.
If you can train yourself not to carry a balance from month to month, however, rewards cards can be an excellent addition to anyone’s wallets, especially if they are chosen by the cardholder to compliment their particular lifestyle. For example, it would behoove frequent travelers to go with a card that offers points that can be redeemed for airfare, hotel stays or at car rental agencies.
Gas rebate cards are also a good option. Some of the most exciting travel rewards cards out there are: theUS Bank FlexPerks Travel Rewards Visa Signature card, theSimmons First Visa Platinum Travel Rewards card and thePenFed Premium Travel Rewards American Express card. For gas givebacks, try theBP Visa card.
A few of the top cash back cards available are: the Chase Freedom card, the Capital One No Hassle Cash Rewards card and the American Express Blue Cash Everyday card.