February....the month conjures up images up puppy love, romantic escapes, and red roses. Granted, credit cards are typically not viewed as being very romantic :) , but America's "love affair" with credit cards that offer rewards and rebates remains strong. Despite restrictions on card rewards, which seem to have grown over the years, the demand for card rewards has not waned.
In fact, the growth of the internet has helped spur America's seemingly insatiable appetite for card rewards. Case and point...Peter Flur, a research engineer from Atlanta, GA, started a web site devoted to card rewards on a whim in 1996. The site was simply an expression of Peter's personal interest in the subject. Though the site lacked the financial backing of a "high-flying Internet IPO", it didn't take Peter long to discover that others shared his interest. Today, Peter's site, CreditCardGoodies.com, averages about one million views each month!
As with any love affair, though, there are some potential pitfalls. The following tips will hopefully help cardholders avoid some of these pitfalls. The goal here is to help America's relationship with reward cards to "continue to blossom."
* Read the fine print carefully before applying for a reward card. All cards contain restrictions on rewards in some form or fashion, and these restrictions aren't always obvious. For instance, some airline reward cards (which offer frequent flyer miles) will not allow cardholders to redeem miles at certain airlines. Redemption of miles can be further restricted by black-out dates, expiration dates, etc. For a detailed description of such restrictions, please view our Reward Credit Cards. In short, the rule of thumb is buyer beware!
* Be mindful of your average annual spending levels (i.e. the average amount that you would charge on a card during a year) when applying for a reward card. Many reward cards offer reduced incentives if cardholders don't reach annual spending thresholds. Furthermore, many cards are more beneficial at certain spending levels.
* If you occasionally carry a balance on your cards, you should avoid the allure of reward cards. Most reward cards have higher interest rates than traditional credit cards and some, particularly airline reward cards, have annual fees. Such disadvantages usually far outweigh any rewards you might earn. We are proud to offer several handy online calculators that you can use if you are trying to decide if a given reward card "really measures up" against a traditional card. These calculators are a great resource and offer several fields for inputting card data (i.e. interest rates, annual fees, etc.).
* Finally, have fun with reward cards! Peter Flur views the pursuit of credit card rewards as simply a game (albeit a potentially profitable game- many cardholders rack up considerable awards on a regular basis) . If you don't like one card after "trying it out for a while", switch to another. There are new cards coming out almost on a daily basis, so keep your eyes peeled and come back to this site often to learn of new offerings! Americans love getting freebies and reward cards offer a plethora of freebies. Who said there "ain't no such thing as a free lunch"?!? :0)