Credit Card Rewards Programs: Rewarding… Or Not?
In 1950, the first credit card that could be used at more than one, specific merchant emerged on the market. The Diner’s Card, started by Frank McNamara, was an invention that got its start when Frank was having a business meeting over dinner, and realized he had forgotten his wallet at home. Of course, the man was extremely embarrassed, and had to call his wife and ask her to bring him his wallet so he could pay for the bill. Then the light bulb over his head turned on, and he thought it would be incredible to have a way to purchase things wherever people shopped, and pay for them later. The Diner’s Card started with 200 card holders, and within a few years- banks and private companies began offering credit cards.
Eventually there were so many credit cards to choose from that the credit lenders had to come up with new ways to stand out from the competition and entice people to select their card over another. Credit card reward programs were born sometime around 1986. Discover card began offering cash back based on the amount of money you spent on your credit card, and the first “frequent flier miles” for credit card users was with Continental Airlines. The frequent flier miles were such a hit that now every airline has joined in the rewards programs, offering discounted trips, free complimentary airfare, travel accident insurance- all based on the amount of spending you do using your credit card.
Now that just about every credit card has some sort of rewards program in place, once again card companies are finding themselves looking for new ways to entice more customers to slide their credit card into their already overflowing card holders in their wallets. Rewards programs have to be turned up a notch, and become so amazing, so absolutely unforgettable that consumers can’t forget them and will apply for and use their card more than the other seven in their wallets when they go shopping!
Currently, the trend in credit card rewards programs appears to be creating cards that offer very specific rewards to cater to what people are doing with their lives. Michelle Shepherd, of MBNA Corp (one of the largest credit card lenders) says the rewards programs are developed with real people in mind, offering something for everyone “…whatever stage in life a person is in, whether it’s someone who’s trying to reduce a mortgage or someone dreaming of going to the Super Bowl”. This is seen in credit cards MBNA offers with rewards programs related to NASCAR and GMAC. Also, Visa offers several credit cards with Disney rewards programs- your spending earns you points towards travel to Disney theme parks and on the Disney cruise line.
Credit card interest rates have begun to rise overall, which is another reason why lenders are trying to entice new customers with their fabulous rewards programs. It would be hard for a card to sell itself to new customers with a high, unattractive interest rate- so lenders have learned to sell the idea of the rewards programs, hoping to gain your interest from that and divert your attention from the not-so-glamorous interest rates.
Keep in mind that while rewards programs can seem very rewarding when you are considering a credit card offer, there is often a lot of information you won’t find out until after you apply for and receive the card. Rewards programs often have limitations, meaning once you reach the ceiling you are no longer eligible for the rewards program benefits- information they don’t normally disclose in the credit card offers you receive in the mail. Also, for rewards programs that allow you to purchase items with points earned based on the spending you do using your credit card, keep in mind you will probably be charged additional money for shipping and handling of those items. For cards that offer travel discounts and airline tickets, many rewards programs require you to then pay transaction fees to redeem them.
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Help answer the question about credit card rewards
I applied for an Amazon Rewards Credit card, not approved immediately..how long will this take?I wanted a credit card, and to get 30 bucks off my purchase, (This is my first credit card, I'm 19) so I applied for an Amazon Rewards card. They told me they couldn't tell me whether I was approved yet. If I filled it out this morning, how long will it take for me to be approved/be able go make my purchase on amazon with this credit card?
Thanks!
August 17th, 2009 at 11:54 am
Citi PremierPass(SM) reward program enable cardholders to earn a point for each dollar spent for general purchases and a point for each three miles flown by a cardholder on any airline. It may include others who buy the ticket using the card.The points earned can be used for travel, products; gift certificates and the like. The most number of points that can be earned annually is 100,000. There is expiration if the account has no activity in every three years.
You may find a great Citi Premier Pass Credit Card Review here:
http://www.rewardcreditcardsite.com/travel-rewards-credit-cards/citi-premeir-pass/
August 17th, 2009 at 12:40 pm
For those who have very good credit and have plans of taking advantage of the reward program, American Express designed a card for you, the Blue Sky Rewards.
What are the reasons why this card is simply for you? It has reasonable interest rate. You do not any annual fee to pay for. You can also take advantage of the 0% introductory rate for your purchases in six months time. It has to be made clear that the introductory rate for balance transfers only applies to those who initiate a transfer when applying online for the card.
The great thing about the Blue Sky from American Express, the credit card rewards program are amazing. There's no annual fee, low introductory rates, and free rewards program with no blackout dates or travel restrictions.
Other benefits offered by the Blue Sky from American Express include auto rental insurance, a Return Protection which credits cardholders with the maximum amount of $300 for purchases that are non-refundable in 90 days. This also includes a year end report.
You may find a great review here:
http://www.rewardcreditcardsite.com/travel-rewards-credit-cards/blue-sky-from-american-express/
August 17th, 2009 at 1:31 pm
Its based on "Net" Purchases, otherwise known as Purchases – returns.
August 17th, 2009 at 3:36 pm
I have a credit card from American Express that pays me 5% cash back on all the purchases I make with no annual fee. I got it from this website http://www.123gocreditcards.com I really recommend checking that site out because it has other rewards cards you might be interested in as well. Good luck.
August 17th, 2009 at 9:30 pm
I prefer cash back because I can use cash for anything. A great cash back card is the AmEx Blue Cash card.
However, if you're interested in travel, you can net more reward value from some airline rewards cards such as the Capital One No Hassle Miles Ultra for Professionals. (You can net about 2% rewards if you buy tickets that are $600+ or nearly but not over $350.)
You can use this rewards calculator to see which rewards card will pay you the most for your normal spending profile:
http://www.creditcardtuneup.com/
The calculator converts all reward currencies (miles, points, cash back) to dollars for an easy apples-to-apples comparison.
August 18th, 2009 at 5:41 pm
Store sponsored reward programs aimed at increasing your loyalty to that store have no impact on your credit score if no credit card is involved.
For credit information, advice, and unbiased evaluations of credit cards, visit http://www.creditgumbo.com
August 18th, 2009 at 11:51 pm
Hi,
You could find out and compare at this site under "Select By reward":
http://track.acclaimnetwork.com/apn_work/scripts/sclick.php?b2s=8790&SUBID=PARAM
August 20th, 2009 at 11:13 am
Well there are cards that will pay you up to 1.5% on all your spending in general. There are also cards that will pay higher rewards percentages on some categories of spending for travel (car rentals, airline tickets, etc.). For example, the Chase BP Rewards card pays 2% back on airline tickets, hotels, vehicle rentals, and restaurants. Other cards will pay up to 3% back for your spending at restaurants and in some other categories like home improvement (e.g. the Citi Professional card). Still other cards pay up to 6% back on gas, groceries, and drug store purchases (e.g. Citi Driver's Edge). I found all these cards at the rewards calculator site here: http://www.creditcardtuneup.com/.
In general, to maximize your rewards (cash back, etc.), you'll probably want to pump all your normal spending through credit card(s) that pay the best rewards in the categories you normally spend the most. Then, just pay off your balance every month and enjoy the cash back rewards or other rewards.
To find the credit card (or combination of cards) that will pay you the most for your normal spending profile, you can use this rewards calculator:
http://www.creditcardtuneup.com/
You just plug in how much you normally spend in each of the various categories each month and it calculates how much you'll earn from the various rewards cards per year.
August 20th, 2009 at 6:57 pm
It sounds like Card #1 is the American Express Blue Cash card. I'm quite familiar with that card's reward structure.
Assuming your monthly spending is even across the 12-month period, then you should go with Card #1 (AmEx Blue Cash). Here's why: Your average rewards for supermarket spending with card #1 will be 3% (i.e. (5% + 1%) / 2), while your average rewards for supermarket spending with card #2 will only be 2%. Your average rewards percentage on all non-supermarket/gas/drug spending for both cards will be 1%.
Note, however, that to really know the optimal card for you for certain, you should take into account your entire categorical spending profile (including gasoline spending, drug store spending, and any other special rewards categories with either card).
You might find that this credit card rewards calculator is helpful to you:
http://www.creditcardtuneup.com/