Some Credit Card Issuers Start Offering Big Rewards
Credit card holders have had some pretty big changes made to their accounts over the last few months, witnessing credit card issuers slash their credit limits, increase their interest rates, and even shut down their unused accounts as these companies aggressively try to minimize the risks posed by cash-strapped consumers.
But card holders have seen little effort by credit card companies to encourage consumer spending, until now. Certain credit card companies are beefing up their rewords programs to attract new customers, The Wall Street Journal reports (“Spend a Little, Save a Little,” Jan. 16, 2009).
3 Credit Card Rewards Programs With Flexible Options
While most credit card rewards programs usually only offer 1 percent cash back on your purchases, says Curtis Arnold, founder of CardRatings.com, a credit card comparison site, two of the following programs offer 2 percent cash back rewards:
The Offer: 1% cash back whenever you use your card. Wells Fargo will apply your rewards earnings toward your mortgage loan principal in $25 increments. Rewards apply to most Wells Fargo mortgages.
The Fine Print: No cap on awards.
The Interest Rate: 10.65% to 21.65% after low introductory APR.
Fidelity Retirement Rewards American Express Card
The Offer: 2% cash back whenever you use your card. Fidelity will deposit reward earnings in $50 increments to your Fidelity IRA account, which you can redeem for merchandise and travel rewards.
The Fine Print: No monthly service fees, no annual fee, and no cap on reward points that can be earned or redeemed.
The Interest Rate: 16.99% after low introductory APR.
Schwab Bank Investment First Visa Signature Card
The Offer: 2% cash back whenever you use your card. Schwab will automatically deposit your reward earnings each month into your Schwab One brokerage account. If you choose not to invest your rewards earnings, you can withdraw them as cash funds.
The Fine Print: No monthly service fee, no cap on awards, no annual fee, and no minimum balance requirement.
The Interest Rate: 14.99% after low introductory APR.
These reward programs are unique, says Arnold, “That’s a big carrot they’re dangling. It’s unusual to see two cards with such aggressive rebates.”
Do Your Research Before Buying In
Before jumping into a credit card rewards program, you should remember three key things:
- Credit card companies can scale back rewards offers at any time.
- Investment options and associated fees that go along with a rewards program will have to make sense with your spending profile. If you rarely charge purchases, preferring to pay in cash instead, a rewards card may not make sense for you.
- Once enrolled, you should pay off your balance every month to avoid paying the high interest rates that can be associated with these types of rewards programs.
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