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Credit card rewards are offered by almost every credit card issuer these days to attract new customers during the current scenario, with intense competition. However, credit card issuers are looking to make profits, a good reason to believe why not all credit card rewards are really as beneficial as they sound. Here are some of the common negative tactics used by credit card issuers to reduce the effectiveness of the rewards for the customers.
Monthly and Annual caps
Monthly and annual caps are often the biggest negative tactics used by credit card companies to ensure that customers don't take the full toll of the rewards. For example, credit cards might carry 5% cash back offer which sounds really attractive. However, the amount of cash that a customer can get back has limits. These limits are not only applied for a month to month basis, but also on an annual basis. So while the customer can go on spending, the cash back amount received wouldn't cross a certain stipulated amount every month and year.
Limits of point redemption
The number of reward points that a customer can redeem in a given month also has limits. While the customer through his or her spending can collect thousands of reward points, the credit card issuer will put a tab on how many points, the customer can really redeem in a month or a year.
Discounts limited to select merchants or purchase limits
Credit card rewards often spell discounts for the customers. However, credit card customers often do not realize that these rewards are actually indirect strategies for making customers spend more. This is why good credit cards offer flat rebates whereas tricky credit cards offer discounts at select merchants, which may not be your first choice. Sometimes, the discount would be available only if you have made a fixed amount of purchases. This strategy aims to drive the customers to spend more in order to win the discount.
If you can redeem your credit card points at a mall, over a period of one year, it is highly likely that you will put the points to good use, buying something that you need. On the other hand, if the points expire in 1 or 2 months, you will have to rush your redemption buying something you might not need, sometimes even paying part of the amount. Therefore the expiration date has been used effectively by credit card issuers to make you spend instead of saving anything for you thus benefiting from the transaction.
Not allowing multiple rewards
If there is a clearance sale offering 25% discount, chances are that your credit card which usually offers an extra discount will not let you add these two discounts up and save money. It is a standard strategy wherein, you cannot use multiple rewards for the same transaction. Therefore you cannot usually redeem your points on a purchase and avail the discounts at merchants or on select merchandise. Therefore credit card customers must realize that most card companies plan their rewards well.