Credit cards are the backbone of the financing industry, driving profits to those institutions who manage their programs well. Competition for customers is fierce and, although consumers typically hold 4, 6, even 8 or more cards, getting them to use one card more than the rest is where profits can be found.

It doesn’t hurt that you run a monthly balance either, for the credit card issuer that is.

One of the most popular lures of credit card issuers are “rewards cards” those credit cards which offer incentives when used. Airline affinity cards were some of the earlier and most popular rewards cards created, but today that category has expanded as issuers contrive different ways to hook customers.

While some consumers still like to accumulate airline miles which can be used toward free flights, upgrades, even hotel stays and car rentals, their popularity has decreased over time. Airlines have made it more difficult to redeem accumulated points and points tend to expire faster than they can be redeemed.

Perhaps the best rewards card out there is the one you can tailor to your specific needs. These cards offer cash back or points toward other rewards, which typically include household items, sporting equipment, hotel stays, restaurant meals, etc. But, the rewards card game only becomes worth playing when you keep the following “rules” in mind:

No fees, no expenses, no monthly balances — Rewards cards should be obtained for free, with no annual fees, and they must be paid off monthly in order to reap the benefit of having one. As most rewards cards charge a high interest rate, carrying balances will serve to cancel out the benefit of accumulating points.

Free points — Oftentimes, to sweeten the deal, a credit card issuer will deposit a large sum of points in your account following the first time you use the card. This means that if you charge your breakfast at McDonald’s, you could be rewarded with an extra 2500, 5000, or even 10,000 points by using the card. From the start, you probably already have enough points to get a free gift, but resist that temptation and keep on accumulating for bigger and better things.

Cash in before they expire — Cards with points that never expire are a rarity as many programs start to remove points after two or three years time. Keep track of your points and save up for the bigger ticket items or cash rewards when you patiently wait to hit the next plateau. Many issuers offer further incentives if you keep accumulating; just don’t lose sight of those points which could start expiring if you wait too long.

Compare offers — Not all offers are the same, though most will pay one to three cents (points) for every dollar spent. Some will pay up to five points on select purchases, such as gas station fill ups, pharmacy visits, and grocery store purchases.

What is the best way to play the game? Answer: familiarize yourself with the credit card issuer’s rewards programs including the occasional program changes which are included with your monthly statement. Look for monthly specials too as that is one way for issuers to move discontinued or slow redeeming merchandise.

You can play the rewards card game and win: just follow the rules and you could score big!

Tags: affinity cards, airline miles, American Express, Credit Cards, debit card, Discover Card, MasterCard, rewards cards, VISA

How many credit cards do you carry? 1, 5, 10, maybe more? Most consumers carry at least one credit card, especialy when you include department store cards, gas station cards, American Express, MasterCard, VISA, Diners, Discover and others. Consumer lending is big business, an area of marketing that lenders use to fuel their businesses.

You probably already know that not all credit cards are alike. Some offer low rates and decent rewards while others charge higher than industry rates and offer no incentives. Likely, most of the cards you have seen fall somewhere in between.

Maybe you have considered getting a new card recently. If so, let’s take a look at some of the popular credit card offers available today:

Low (or Zero) Percentage Rate Credit Cards — Lending rates remain low and there are still credit cards available with low rates, even 0% financing for balance transfers. Typically, these special rates are in place until the transfers are paid off; new purchases are usually charged at a higher rate.

Teaser Rate Credit Cards — To get you to use a new card, some lenders will offer you a special “teaser rate” that will run for several months, usually for as long as six months perhaps for a year. Purchases can be made at a very low rate (let’s say 3.9% for twelve months) and then rise to 15.9% or higher later on. These cards are popular with consumers who want to purchase an expensive item and pay it off over several months without incurring high interest charges.

Rebate Credit Cards — Make your credit card work for you! If this sounds like a marketing ploy, it isn’t: certain credit card providers will give you cash rebates on select purchases. For example,if you spend $2000 you could have $20 or $40 credited to your account — see each offer for specific details.

Award Credit Cards — Also known as rewards cards, an award card works like a rebate credit card: you get to choose prizes based on the number of points you have accumulated with your purchases. Usually, one point is awarded for every dollar spent and you can redeem those points online or through a prize catalog provided by the credit card company.

Pre-paid Credit Cards — For the consumer with bad credit or for students who at college, a pre-paid credit card allows holders to build up their credit while still having access to plastic. You don’t have to worry about carrying around a lot of money; if your car is lost or stolen you can replace it.

Many of the card deals mentioned are for MasterCard or VISA cards, but Discover and American Express have special offers which might be of interest to you too.

Tags: American Express, credit card, debit card, Diners, Discover, Master Card, VISA

Short term interest rates have dropped by 2.5% since last Fall thanks mostly to the Federal Reserve Bank pushing its discount rate down to some of its lowest numbers in history. Although at 3.25% the discount rate is above the all time low of 1.00% reached in 2004, the result should be much lower consumer rates across the board.

Except when it comes to credit cards.

Curiously to many consumers, credit card rates haven’t dropped as fast as some would have hoped. Instead, some cardholders have been rudely awakened and are now paying rates that are higher than ever before.

Credit Card Rates Increase

Bankrate.com, one website that tracks this sort of information has said that credit card interest rates have decreased by about 1.4% since last October. On the other hand, some issuers have hiked up their rates to the chagrin of cardholders.

Reasons For The Uptick

There are several reasons why consumers are paying more for their credit cards when they should be paying less including:

• Some cardholders had promotional or introductory rates. When the promotional period ended, the new higher rate kicked in.

• Banks are worried about their mortgage losses and see credit cards as one way to bring in money. If you don’t carry monthly balances, then credit card interest rate changes have no impact on you.

• You were late…with something. You’ve been paying your credit card statements on time, but you’ve been late with a utility bill, car payment, or some other consumer invoice. Guess what? Creditors share this information with each other. Your credit card company is looking for any excuse to jack up your rate and they found one.

If you are dissatisfied with your credit card, call the issuer and ask for a lower rate. If you do not receive a lower rate, consider shopping around for a new card.

Time To Switch Credit Cards?

If your credit is good or excellent, then getting a new card shouldn’t be difficult for you. However, if your credit is fair or poor, then a new credit card can cost you more in interest rates and other fees. In this case it would be better to simply not use your current card(s), and work diligently to pay off your debt.

Resources

Manage Credit Card Use

Smart Money Tips

Time for a New Card

Tags: charge card, credit card statement, Credit Cards, debit card