Finding The Best Reward Credit Cards
Reward credit cards come in a variety of forms. Specifically how points toward rewards are earned and the types of rewards that can be earned with a reward credit card varies from card to card.
The rewards offered by reward credit cards are generally related to a special area. For example, some reward credit cards allow cardholders to earn points when making purchases at gas station, supermarkets, or drugstores. The rewards earned are often related to this in some way, such as the cardholder may receive gift certificates to the same types of stores. Similarly, the reward credit card may be related to airline travel. Every time the cardholder makes purchases with a specific airline, he or she earns airline miles or free travel. In addition, these airline reward credit cards also generally offer the cardholder free companion tickets.
When it comes to choosing the best reward credit cards, the consumer needs to assess his or her lifestyle and determine which rewards are most attractive – and most profitable – for his or her needs. A reward credit card that provides specialized rewards, such as gift certificates to a specific restaurant, may not be useful to a cardholder that does not have a need for that reward.
Reward credit cards can provide credit cardholders with fantastic rewards for their purchases. At the same time, the consumer needs to be sure he or she isn’t actually paying for the reward in the form of finance charges and annual fees. Many reward credit cards assess an annual fee. If this annual fee costs more than it would cost to simply purchase the reward, it is certainly not worth paying for.
The same holds true when looking at the APR. A cardholder who pays the balance of his or her credit card in full each month need not worry about the APR. One that intends to carry a balance from billing cycle to billing cycle, however, must consider the amount of money that will be spent in the form of finance charges. Once again, if the finance charges will be too great, the rewards of the credit card are not really rewards – they are items the cardholder is paying for.
Several reward credit cards have expiration dates. For those cardholders that will not be able to collect enough reward points before they expire, these reward credit cards may not be the best option. Similarly, some reward credit cards have limitations to how many points can be acquired each year. Cardholders need to consider these limitations in order to ensure they are receiving the greatest amount of rewards possible. If a cardholder spends 15,000 per year on a credit card, but a rewards credit card only rewards up to the first 10,000, that is 5,000 that is going unrewarded. The answer may be to select a different reward credit card, or to simply stop spending on this particular credit card once the limit has been reached. After all, every pound spent on a credit card deserves to be rewarded.
A good place for consumers to look for the best reward credit cards is at the businesses they frequent. For example, a consumer that routinely purchases gas from a specific type of gas station should enquire with that business to learn if it has a rewards credit card. The same is true for a consumer that frequents certain restaurants, stores, and airlines. It is becoming increasingly commonplace for businesses to pair up with major credit cards to offer special reward cards.
Facts About The APR Of Credit Cards
When it comes to credit cards, the APR or annual percentage rates is always the ultimate source of confusion and chaos for most credit card users. If you dont have a credit card but planning on applying for one or you were just recently approved for a credit card then you must definitely read this article. Everything about APR of credit cards shall be explained so read carefully and remember!
Whats APR? Basically, the APR or annual percentage rate of a credit card is the combination of low interest rates and finance charges. With that said, lets move on to the next topic.
Are There Really Zero Percent (0%) APR Intro Rates And What Does It Mean? Lets say you already own a credit card and youve used up most of your credit already. With a 0% APR intro rate credit card, you can transfer your balance without incurring additional interest.
Nice, isnt it? Also, if youre planning to purchase something but paying it off before the intro period is over then yes, having a 0% APR intro rate credit card is the best option for you. Remember, the keyword here is intro which indicates that this is only something like an introductory offer so dont expect the 0% APR to last forever.
What About Low Interest APR Credit Cards? If youre in search for a credit card with long-time charges then its better to go for a low interest APR credit card rather than one with a 0% APR credit card because the interest rate would just revert to normal for the latter.
Which One Is Better: A Low Interest APR Credit Card Or A 0% APR Credit Card? Well, this question would require you to research a bit but since your decision will ultimately affect your finances then its better to go ahead and research, right?
The first question you have to ask your credit card company is about the length or duration of the intro period if youre interested in availing yourself of a 0% APR intro rate credit card. The intro period usually lasts between three to fifteen months. Anything less is naturally a disadvantage and anything more is preferable.
Ask also about what the APR of the credit card is going to be after the intro period. If the interest rate is higher than the APR of other credit cards that do not offer 0% APR for a certain period of time AND youre not planning to maximize the 0% APR youre given then maybe, its better to simply go with a low interest credit card.
Factors That Trigger Credit Card Rate Hikes
Are credit card companies trying to scam you? On the one hand, they provide a valuable service that gives you the added convenience of being able to purchase items and services you need and sometimes don’t need and to pay them off in a manner that best suits you.
On the other hand, some credit card issuers are trying to scam you and they do everything in their power – legal or otherwise to do it. Legal or not, many of the practices they follow are clearly unethical and unless you are a contract lawyer you couldn’t determine how they planned on scamming you anyway because they hide everything in the countless pages of fine print that comes with every cardholder agreement.
According to Harvard Law Professor Elizabeth Warren, the credit card companies are misleading consumers and making up their own rules. “These guys have figured out the best way to compete is to put a smiley face in your commercials, a low introductory rate, and hire a team of MBAs to lay traps in the fine print.”
The problem is that the industry is operating without fear of penalty. There’s no regulator or customer who can bring this industry to task.
Deadbeat or Revolver
In the credit card industry there are two types of customers – the deadbeat and the revolver. Don’t take this the wrong way but hopefully you’re a deadbeat because in the lingo of the industry a deadbeat is someone who uses their credit cards the way they are suppose to.
As in they pay-off their balances each month and therefore incur no interest charges. No profit in that scenario and thus, if you pay-off your balances each month (about one-third of Americans do) then you should be proud to be called a deadbeat because you are using your credit cards wisely.
On the other hand, the majority of Americans are called “revolvers”. A revolver is someone who carries over a balance and is considered to be “the sweet spot” of the banking industry. This “sweet spot” continues to expand as the average credit card debt among American households has grown to about 8,000 — which is more than double what it was just ten years ago. This debt has helped generate record profits for the credit card industry in 2004, an estimated 30 billion before taxes.
The 0% Interest Offer
The game today is the “0% interest for 6 months” offer. Once again, this can be a legitimate and great deal if you know how to play the game (”deadbeat”) but if you don’t (”revolver”) it will end up costing you more money in the long run because after the initial 6 months the rate will usually jump up to a much higher rate than the normal purchase rate.
Rate Hike Triggers
The industry provides many reasons to justify rate hikes and in all fairness, some are actually valid. However, many are not and are just flat-out deceptive. One Banking Association spokesman said that, “Because the credit card business is unsecured lending, the risks associated with the business must be offset.”
Industry critics say that an ever growing share of the industry’s revenues come from deceptive tactics. One example is how the “default” terms are spelled out in the fine print of the cardholder agreements. The terms and conditions can be changed at any time, for any reason with only a 15 day notice.
Here are just some of things that can trigger late fees, penalties or rate hikes.
Late Payments
If you don’t pay your bill on time, the company seems quite justified in taking away your good rate. After all, you’ve broken the rules of your contract. The problem lies in the fact that penalty fees and rates are sometimes triggered by a single lapse or a payment that arrives just a few days, even a few hours late or a charge that exceeds the credit line by a few pounds or a loan from another creditor which renders the cardholder “overextended” as defined by the three all-powerful credit bureaus – Experian, Equifax and TransUnion.
In addition, the industry is raising interest rates, adding new fees and generating payment due dates on holidays and Sundays with their only motive being of tripping you up and hoping it will result in you making a payment late. The industry has become a very anti-consumer marketplace.
Spending on Other Cards
If you think that one card issuer doesn’t know with whom and how much you spend on other cards then think again. As a result, if you exceed your credit limit or make a late payment on another card it can trigger what’s called a “universal default clause” and result in higher rates on other cards – cards that you may have had for years and never had a late payment.
Defaulting on Non Credit Card Bills
Defaulting on any bill (utilities, cell phone, mortgage, etc) can trigger higher interest rates on your credit cards. Every bill you have is tracked by the 3 primary credit bureaus and with the emergence of technology your information is readily available to any card issuer. So if you default or pay late on anything, they’ll spot it and it could result in higher rates on some or all of your credit cards.
Some experts say the profitability of credit cards began twenty-five years ago when the banking industry successfully eliminated a critical restriction: the limit on the interest rate a lender can charge a borrower. Deregulation, coupled with a revolution in technology that enables the almost real-time tracking of personal financial information and the emergence of nationwide banking, has facilitated the widening availability of credit cards across the economic spectrum. But for some, the cost of credit is often far greater than it appears.
If your rate is suddenly increased, the first thing you should do is cancel the card and move the balance somewhere else. If you can’t do that for whatever reason, then contact your local consumer protection agency and if all else fails you may need to contact a lawyer.
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Extra Options for your Credit Card
Most people dont want to spend a lot of money on having a credit card. They will shop around for the best possible deal they can get on a credit card. They will wish to get as low an interest rate as possible and definitely not pay a monthly or annual fee for the card. Getting the best price on a credit card makes a lot of sense for most people, in fact for the vast majority of people; however, there are circumstances in which you will wish to pay more for a credit card than you have to.
One thing that many people opt for is a fee-paying credit card. This fee will be payable either annually or monthly, and you will have to pay it no matter how much or how little you use the card. Paying the fee will entitle you to certain benefits. For example, you will be given a preferential interest rate that will be among the lowest credit card interest rates on the market. If you currently have a high outstanding credit card balance that you frequently pay interest on, then having access to a reduced interest rate will have the potential to save you your annual fee many times over. Another benefit of the feeing paying card is that it may give you access to a higher monthly spending limit. This will be valuable if you rely on your credit card to make a lot of vital purchases.
If you use your credit card abroad a lot, you will know that most cards charge high exchange fees, and transaction charges on all transactions made in foreign currencies. To save on these sometimes very high fees, you can opt for a fee-paying credit card and you will no longer be subject to them. This can be a very wise saving for all people who use their credit card abroad a lot.
Another extra charge you can optionally incur on your credit card is that you may opt for optional payment protection insurance. This insurance will be calculated based on the outstanding balance you have on your credit card. It will be charged as a percentage of that balance and is designed to protect you against circumstances in which you become unable to keep up with repayments. This covers instances where you may become unable to make your repayments if you lose your job or become ill or unable to work through no fault of your own.
A fee-paying credit card can also help a cardholder when they are in trouble, especially while abroad. Some of the services that a fee-paying credit card provides are second to none. With many cards, if you were to lose your credit card you just call a special international help line number where you will find assistance. Most fee-paying credit card services will provide a new credit card within 24 hours and will supply cash until your new credit card is ready.
