This article aims at offering insight on what are point cards and how do they work.
Reward cards or points cards give consumers points for the money charged on their card – it can be for many different things, but travel points for frequent flyer miles or hotel / motel lodging is the most popular one among these. It can also be points for eating out at a certain restaurant or shopping at a certain department store.
Finding these Cards
Picking the best points-bearing credit card often is a difficult decision to make, especially when every issuer offers what seems to be a great deal. However, consumers often can narrow down their choice by closely looking at other features of the card and then deciding if the benefits add anything to their spending habits or lifestyle. For example, cards accumulating points for travel are ridiculous to use if you do not travel a lot.
Searching around for such cards can be tedious when faced with an assortment of rewards, fees, annual percentage rates, and introductory rates; but the trends seem to show that the vast number of Americans do focus on reward points, usually frequent-flier miles, when choosing their credit cards.
Reading Fine Print
Even when point or reward bearing cards tend to be popular among customers, they often charge fees that are higher and need a higher credit rating than other conventional lines of credits. As more and more Americans are trying to trim down debt and raise their credit, lenders may see a shift in the type of credit cards that customers are looking for.
Things to Consider
For instance, most reward or point cards will offer hotel points / travel, deals with cash back or generic points – according to Fox Business news. Customers may begin weighing the pros against the cons by deciding what types of points are most important to them. Do they travel frequently? Are the airline miles limited to a certain flyer? How are reward points redeemed and are there any restrictions? These are several questions that consumers need to ask themselves prior to making a decision.
Higher Fees and Rates
Points cards also have a tendency to carry higher rates and fees than other types of credit cards. Consumers may profit from looking at their financial situation and deciding whether they are able to actually afford variable interest rates or membership fees. Customers need to read any terms on their credit cards though to make sure there are no fees hidden or conditions that go together with the product.
Wall Street Journal recently reported that even if mile programs are a strong determining factor in whether or not a consumer secures a credit card, very few calculate whether they are earning maximum rewards. According to the newspaper, most consumers only redeem tickets at a 1.5 cent per mile for every 3 cents they spend.
There was another report that shows that although most Americans go with credit card having flier rewards, fewer customers are looking for this type of product and electing instead for cards that offer cash back incentives and bonus points, which typically come with fewer restrictions and are easier to redeem.