Rewards Credit Cards
Rewards credit cards are popular with consumers. Some cards pay cash back on purchases while some provide travel perks.
But consumers who load those cards up with debt that they carry month to month will find that interest charges erode many of those rewards. A recent survey by CompareCards.com found that 39 percent of consumers with a rewards card carry a balance. The researchers say the average balance is $2,547.
The net result isn't all that rewarding. Let's assume tha...
In the last decade, credit card companies have stepped up the rewards they offer to cardholders, providing everything from cash back to points toward travel discounts.
Surveys have found consumers like these rewards, and the offers often sway a decision on whether or not to apply for a card.
But once you have a card in your wallet, what do you do with the rewards? A new report by financial website Bankrate.com addressed that question and found 31% of consumers with a rewards card have never redeemed the rewards.
In fact, most of us fall into one of two categories: either we are nearly obsessive about redeeming rewards or we don't do it at all. Bankrate's Robin Saks Frankel says it's hard to figure out.
Not gaining value
"Credit card rewards don't usually gain value over time," Frankel said. "In fact, they're more likely to lose value as companies require more points or miles for the same perks. Your best move is to cash them in regularly."
Bankrate found that when consumers do take advantage of their rewards, nearly half prefer to get cash back. That's actually a very savvy choice.
It might be hard to place a quantitative value on other types of rewards, such as airline miles or hotel points. But cash is money in the bank. It can be accumulated to pay for a purchase or can be applied each month to pay a portion of the bill.
Of all the types of rewards, cash seems like the most useful. Millennials favor it over older consumers by a wide margin.
Airline miles a distant second
The Bankrate report found airline miles were a distant second, with only 17% of consumers opting for this perk. Twelve percent of consumers prefer to get their rewards in the form of gift cards.
One drawback to some of the more generous rewards cards is a sometimes hefty annual fee. With so many other rewards cards available with no fee, it's wise to carefully consider all offers before selecting a card that charges a fee.
"The credit card market is very competitive right now, so if you're not happy with a fee, you can either shop around to find another card that doesn't have one or you can see if the issuer is willing to waive the fee to keep your business," Frankel said.
In fact, as we recently reported, a study found more than 80% of cardholders were able to get an annual fee waived or reduced just by asking.
In the last decade, credit card companies have stepped up the rewards they offer to cardholders, providing everything from cash back to points toward travel discounts.
Surveys have found consumers like these rewards, and the offers often sway a decision on whether or not to apply for a card.
But once you have a card in your wallet, what do you do with the rewards? A new report by financial website Bankrate.com addressed that question and found 31% of consumers with a rewa...
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In early March, Costco announced it had entered into a new credit card agreement with Citi to replace its current co-branded American Express card. Now, Citi has announced that the launch date for its new Costco card will be June 20.
Once issued, the Citi Visa Costco Go Anywhere credit card will serve as the Costco membership card, while providing rewards to users in the U.S. and Puerto Rico.
Citi says the new Costco Visa cards will be mailed in May. Costco members should follow the directions for activating the card but should keep using their current American Express card until the switch-over on June 20.
Rewards
Citi says its new Costco card will allow users to earn 4% cash back on eligible gasoline purchases, including at Costco pumps. The 4% reverts to 1% after $7,000 in gas purchases in a given year.
The card will pay 3% cash back at restaurants and eligible travel purchases. It pays 2% cash back on Costco purchases and 1% everywhere else.
Citi says Costco members who currently use the American Express card do not have to apply for the new Visa card. It will automatically be sent to members, who should destroy the Costco American Express card on June 20.
Current points
But what about any rewards that members may have piled up from American Express? Citi says customers won't lose them.
“Rewards that were not previously distributed to you will be transferred automatically to your new card on June 20, 2016, so you won’t lose any of the rewards you’ve already earned,” Citi said on its website. “Your February 2017 cash back rewards coupon from Citi will include cash back rewards earned on your Costco card from American Express during 2016 that were not previously distributed to you by American Express.”
However, if your Costco card from American Express earned Membership Rewards points, they will not transfer to your new card.
In early March, Costco announced it had entered into a new credit card agreement with Citi to replace its current co-branded American Express card. Now, Citi has announced that the launch date for its new Costco card will be June 20.
Once issued, the Citi Visa Costco Go Anywhere credit card will serve as the Costco membership card, while providing rewards to users in the U.S. and Puerto Rico.
Citi says the new Costco Visa cards will be mailed in May. Costco members should...
There are many rewards credit cards to choose from, and some rewards are better than others. But do you know how much better some are?
The personal finance website CardHub.com recently calculated what cardholders stand to get over a two year period, then did a side-by-side comparison. Over that two year period, the study found an $800 difference between the best and worst rewards.
According to the authors, Capital One offers the best credit card rewards program, with a score 49% higher than last place finisher TD Bank. The difference between the two programs is $812 over two years.
Capital One offers two Quicksilver rewards cards – the Quicksilver Card for excellent credit and the Quicksilver One Card for just average credit.
The Quicksilver Card for excellent credit provides unlimited 1.5% cash back on every purchase. In addition, there is a one-time $100 bonus if you spend $500 on purchases within the first three months.
The Quicksilver One Card is almost as rewarding. It has the same unlimited 1.5% cash back on every purchase but lacks the $100 bonus. It also charges a $39 annual fee while there is no fee with the Quicksilver Card.
By way of comparison, the TD Bank Visa Credit Card pays a $100 bonus when you spend $500 in the first 90 days. It also pays 2% on purchases from local delis, fast food restaurants, and coffee shops, as well as casual restaurants and fine dining, plus 1% on all other eligible purchases.
Most rewarding for travel
How you use your rewards can also make a difference in the benefits. For example, the study found using Capital One rewards for travel produced 54% more value than using the points for merchandise.
Ease of use for rewards is sometimes a major factor. The study found Discover has the most consumer-friendly redemption policies; Fifth Third Bank has the most restrictive policies.
The authors offer some advice for choosing a rewards card. They say to start with identifying where you tend to spend the most money and to find a card that rewards that particular activity. For example, if you rarely eat out, don't choose a card that weights its rewards toward restaurant spending.
Consider a card's earning potential, but don't overlook the redemption value. Both are important. Look for a nice balance between the two.
If you are not particularly detailed-oriented, choose a card with the fewest hassles. If you are undecided about which rewards suit you best, go with cash back. It's usually hard to beat cash.
Finally, don't overlook annual fees. Choosing a card with no annual fee will put you ahead. Paying an annual fee will cut into any rewards you might gain.
There are many rewards credit cards to choose from, and some rewards are better than others. But do you know how much better some are?
The personal finance website CardHub.com recently calculated what cardholders stand to get over a two year period, then did a side-by-side comparison. Over that two year period, the study found an $800 difference between the best and worst rewards.
According to the authors, Capital One offers the best credit card rewards program, with a sc...
Sporting goods retailer Dick's Sporting Goods is relaunching its Rewards of Sport Credit Cards, issued by Synchrony Bank.
The company said it would continue to offer two different cards under the program. One – the Rewards of Sport Credit Card – remains a private label card for use at all Dick's Sporting Goods, Field & Stream, and Golf Galaxy locations.
The Rewards of Sport MasterCard is a more general purpose card. It can be used at all the same locations, in addition to any other retail location that accepts Mastercard.
Dick's says its cardholders will get some new benefits under the relaunch, including 10% back in rewards on in-store purchases the first day the account is active.
Periodically, consumers using the card may have the option of financing in-store purchases.
Cardholders will also still get upgraded ScoreCard Rewards benefits on purchases. They include 6% back in rewards on routine in-store purchases and 1% back in rewards on purchases in other stores where MasterCard is accepted. That benefit will apply only to Rewards of Sport MasterCard holders.
Other store-issued cards
Store-issued credit cards have become more common in recent years, with retailers using them as a means to build brand loyalty. Some are more rewarding than others, but consumers who choose a store-issued card should make sure the store is a place they shop frequently.
In its analysis of store-issued credit cards, Consumer Reports says most store-issued credit cards carry interest rates much higher than you would pay on other cards. If you are in the habit of paying the balance in full, each month, it's not really an issue.
Often retailers will offer an attractive discount of 15% or so on whatever you happen to be buying if you apply for their card on the spot. While that might be tempting if you are making a very large purchase, consumers should guard against opening too many credit card accounts because of the potential negative impact it can have on credit scores.
Sporting goods retailer Dick's Sporting Goods is relaunching its Rewards of Sport Credit Cards, issued by Synchrony Bank.
The company said it would continue to offer two different cards under the program. One – the Rewards of Sport Credit Card – remains a private label card for use at all Dick's Sporting Goods, Field & Stream, and Golf Galaxy locations.
The Rewards of Sport MasterCard is a more general purpose card. It can be used at all the same locations, in addition to...
How's your credit score? If it is a number that's considered “excellent,” you shouldn't respond to just any random credit card offer.
If you do, you could be leaving money and services on the table. That's because credit card companies have cards for different levels of credit worthiness. They save the best benefits for consumers with excellent credit and, as a rule, have no annual fee.
Excellent credit, by the way, is considered a FICO score of between 750 and 850.
Chase Slate
The Chase Slate has a couple of features that make it an attractive choice. If you are carrying a balance on another card, you can transfer the balance to your Chase Slate card with no transfer fee, as long you do it during the first 60 days the account is open.
On the other hand, if you have an excellent credit score, you might not be carrying a balance, negating one of the card's primary benefits.
Another nice feature is a monthly FICO credit score, given at no charge. While there are several sites now that provide a “free credit score,” these scores are not always your FICO score, a proprietary formula that most lenders rely on to make credit decisions.
What you won't get with the Chase Slate are generous cash back rewards, so it might be wise to consider a rewards card instead if you don't need the balance transfer feature.
BankAmericard Cash Rewards
While there are many cash back rewards cards for consumers with excellent credit, the BankAmericard Cash Rewards card is definitely worth a look, especially if you are already a Bank of America customer.
Upon signing up, the card pays a $100 cash bonus after you spend $500 in the first 90 days the account is open. You earn 3% cash back at the gas pump, 2% at the supermarket, and 1% on all other purchases. In all, you can earn up to $1,500 in combined purchases each quarter.
If you are a Bank of America customer, you can get a 10% customer bonus every time you redeem your cash back into your checking or savings account. For Bank of America Preferred Rewards clients, that bonus can be 25% or more.
There are plenty of other good rewards cards. You can check out some of them here and here.
Citi Diamond Preferred
If you would like a lot of extra services with your credit card, then you might consider the Citi Diamond Preferred card. VIP treatment is its main attraction.
Cardmembers are entitled to 24/7 access to personalized concierge service, providing help in booking hotels, flights, and concert tickets.
It also has a fairly lengthy 0% introductory period for balance transfers – 21 months. However, there is a fee for these transfers, ranging from a minimum of $5 to a maximum of 3% of the transferred amount.
How's your credit score? If it is a number that's considered “excellent,” you shouldn't respond to just any random credit card offer.
If you do, you could be leaving money and services on the table. That's because credit card companies have cards for different levels of credit worthiness. They save the best benefits for consumers with excellent credit and, as a rule, have no annual fee.
Excellent credit, by the way, is considered a FICO score of between 750 and 850.
The Ch...
Chase is now advertising a new credit card, the Chase Freedom Unlimited Card, a companion to its Chase Freedom Preferred.
While the Preferred pays 1% cash back on most purchases, and 5% on rotating categories, the Unlimited, as its name implies, pays 1.5% cash back on an unlimited amount of everything, with no annual fee.
The card has four main features that make it attractive. First, the aforementioned 1.5% cash back on every purchase. Other cards usually have caps.
You can redeem for cash back at any time, and the rewards you rack up don't expire, assuming your account remains active.
Bonus cash
The card also pays a $150 bonus after you spend $500 during the first three months the account is open. If you add an authorized user, you earn another $25 reward, if that user also makes a purchase during the first three months.
The Unlimited also has a 15 month introductory rate of 0% APR on purchases. That would allow you to finance a significant purchase and pay for it over 15 months without paying any interest.
If you want to transfer a balance from another card, you get the same 15 month introductory period at 0% interest. However, there is a 5% balance transfer fee.
After the 0% introductory period, the variable interest rate on both purchases and balance transfers is 14.24%, 19.24%, or 23.24%, depending on creditworthiness.
Consumer protections
Like many credit cards, the Unlimited comes with some consumer protections. In case of fraud, the cardholder has zero liability. It also allows you to decline a rental car company's collision damage waiver, providing replacement coverage at no extra charge, as long as you use the card to pay the entire cost of the rental car.
There is also an insurance policy of sorts on new purchases. The Unlimited's Purchase Protection feature covers your new purchases for 120 days against damage or theft up to $500 per claim and $50,000 per account.
Its price protection feature can make sure you always get the best price. If a card purchase made in the U.S. is advertised for less in print or online within 90 days, you can receive the difference, up to $500 per item and $2,500 per year.
Chase is now advertising a new credit card, the Chase Freedom Unlimited Card, a companion to its Chase Freedom Preferred.
While the Preferred pays 1% cash back on most purchases, and 5% on rotating categories, the Unlimited, as its name implies, pays 1.5% cash back on an unlimited amount of everything, with no annual fee.
The card has four main features that make it attractive. First, the aforementioned 1.5% cash back on every purchase. Other cards usually have caps.
You c...
Alaska Airlines has made a couple of benefit changes to its Visa Signature Card. The credit card no longer carries foreign transaction fees, and bonus miles for new customers have been increased to 30,000, as long as the new cardholders meet the qualifying spending level.
"As we continue to expand our global partnerships and add to our growing list of more than 800 partner destinations worldwide, eliminating foreign transaction fees is the right thing to do for our world-traveling cardholders,” said Sangita Woerner, Alaska's vice president of marketing.
The expanded perks are in addition to the other benefits the card carries, including a free checked bag for the cardholder and six others included in his or her party; three times the miles on Alaska Air purchases; and an annual companion fare for $121.
Alaska Air's mileage plan currently features 17 international and domestic airline partners, flying to more than 800 global destinations. Alaska Air says its mileage plan was rated number one among airline rewards programs by U.S. News.
It should be noted that an airline credit card is probably not the best choice for people who rarely travel by air. While there are other rewards associated with the cards, the most lucrative are associated with air travel.
Other options
For example, the Frontier Airlines Credit Card is another attractive choice. Right off the bat, new cardholders earn 40,000 bonus miles after spending $500 the first 90 days the account is open. Those 40,000 bonus miles are good for two round-trip domestic tickets, subject to availability.
Customers earn double miles per $1 spent on Frontier Airlines purchases and one mile per $1 spent on all other purchases.
Customers earn a $100 Frontier Airlines flight discount voucher after spending $2,500 or more in purchases during the card membership year.
For consumers who do not travel by air that much, a rewards card with a generous cash back feature is the better choice. Here are some options to consider.
Alaska Airlines has made a couple of benefit changes to its Visa Signature Card. The credit card no longer carries foreign transaction fees, and bonus miles for new customers have been increased to 30,000, as long as the new cardholders meet the qualifying spending level.
"As we continue to expand our global partnerships and add to our growing list of more than 800 partner destinations worldwide, eliminating foreign transaction fees is the right thing to do for our world...
Ally Bank has issued a new rewards credit card. The Ally CashBack Credit Card joins the ranks of other cards that reward customers by returning a percentage of purchases in the form of cash or other perks.
The new card will provide a 2% cash back reward when the card is used for eligible gasoline and grocery purchases. It provides 1% cash back on all other purchases.
However, the new credit card features an additional 10% bonus if cash back rewards are deposited into an Ally Bank non-IRA savings, interest checking, or money market account.
Ally says another feature of the card is the rewards are not capped, as they are with many credit cards, and they never expire, as long as the account remains open and in good standing.
Issuing card a logical move
"As we evaluated options to expand our product offerings, adding a credit card to our portfolio was a logical move since it has been a frequent request of our Ally Bank customers," said Diane Morais, CEO and president of Ally Bank.
Morais is particularly pleased with the 10% reward for deposits in bank accounts, saying it is consistent with the bank's philosophy to help customers maximize savings opportunities.
Ally Bank, formerly GMAC Capital, has been a completely online financial institution since 2010. The bank, headquartered in Charlotte, N.C., has no brick and mortar branches.
Customer survey
The company said it launched this new product after studying consumer preferences in credit cards with a focus on looking at the best way to use rewards. It conducted a survey of customers who use credit cards and found 58% preferred cash back rewards over travel rewards, store promotions, and introductory interest rates or bonus rewards.
The survey also found 80% said they would like to have multiple financial products with the same bank – bank accounts, loans, and credit cards – if they earned rewards for doing so.
"The savviest consumers not only know what cards to pick, but how to maximize their rewards," Morais said. "When stacked against all the credit cards available to consumers, the Ally CashBack Credit Card is a highly competitive product."
The Ally CashBack Credit Card is issued through TD Bank N.A.
Ally Bank has issued a new rewards credit card. The Ally CashBack Credit Card joins the ranks of other cards that reward customers by returning a percentage of purchases in the form of cash or other perks.
The new card will provide a 2% cash back reward when the card is used for eligible gasoline and grocery purchases. It provides 1% cash back on all other purchases.
However, the new credit card features an additional 10% bonus if cash back rewards are deposited into an A...
Rewards credit cards have grown in popularity as consumers have realized they can get a little money back every time they make a purchase.
Some cards pay 3% on some purchases, some pay 1% or 2% on every purchase. It isn't a lot of money, but it can add up over time.
What sometimes gets overlooked are the bonuses some credit card companies pay, just for opening an account. It's just a one-time payment, but it can be significantly more than the cash back you earn on purchas...
The holiday shopping season is fast approaching and surveys have shown that many consumers have been making purchases since Labor Day.
So now might be a good time to point out that if you plan to do a lot of end-of-the-year spending, doing it with a rewards credit card might help you save as much money as hitting the stores early on Black Friday.
In recent years personal finance experts have emphasized rewards credit cards as an easy way to save money. Like any credit card, a rewards card needs to be used responsibly, but if utilized to make purchases you would ordinarily make with a debit card or cash, credit card purchases can put money in your pocket.
How much varies from card to card, but the folks at Discover have rolled out some special holiday promotions, upping the rewards consumers can earn during the holidays, using the Discover it Card or Discover it for Students. Both cards normally pay 1% on all purchases but also have special quarterly promotions.
5% bonus
For example, for the fourth quarter Discover will pay a 5% cashback bonus on purchases at Amazon.com, department stores, and Sam's Club – places where consumers probably do the lion's share of their shopping. The 5% bonus applies to a total purchase amount of $1,500. Above that, any additional spending earns the regular 1% cash back.
“We try to make sure that we don't make our program complicated,” Maureen Powers, vice-president of rewards for Discover, told ConsumerAffairs. “We don't want customers to have to start planning how they are going to earn their rewards, or having to do math.”
Added bonus for new customers
There's an even better payoff for consumers who just recently obtained a Discover it Card, or plan to get one soon.
“Our card members can earn Cash Back Match,” Powers said. “They are earning all of these rewards, and then at the end of the first 12 months that they have the card, we will double all of those rewards.”
How much can that add up to? Let's assume you are a new cardholder who ends up spending $1,750 at Amazon, a number of department stores, and Sam's Club. You earn $75 on the first $1,500 and $2.50 on the difference between $1,500 and $1,750. Then, because you qualify for Cash Back Match, the amount is doubled for a total of $155 in cash rewards.
Powers also says Discover offers price protection, in case you find the item you purchase later at a lower price.
“What consumers will do is send in the receipt and show where they found a better price, and Discover will refund the difference up to $500, if you do it within 90 days of the purchase,” she said.
While doing your holiday shopping with cash may keep you from overspending, it doesn't put money in your pocket. But it bears repeating, using a rewards credit card for all your holiday purchases will only put you ahead if you exercise discipline and don't over-spend.
The holiday shopping season is fast approaching and surveys have shown that many consumers have been making purchases since Labor Day.
So now might be a good time to point out that if you plan to do a lot of end-of-the-year spending, doing it with a rewards credit card might help you save as much money as hitting the stores early on Black Friday.
In recent years personal finance experts have emphasized rewards credit cards as an easy way to save money. Like any credit car...
Consumers should be aware by now that there are big advantages to using a rewards credit card, and in particular, a card that rewards certain things.
For example, most consumers are probably better off with a cash-back credit card, which pays as much as 2% on all purchases or as much as 5% on certain categories.
But frequent air travelers might profit more from using a card that rewards in miles. We've identified three such cards that are worth a look.
Capital One VentureOne Reward
Consumers who carry the Capital One VentureOne Reward Card earn an unlimited 1.25 miles on every purchase, making it easy to rack up miles. As an added bonus, there is no annual fee – a rarity in this class of credit card.
When you earn 100 miles, you've earned $1 dollar in travel rewards. But the rewards come a lot faster for new cardholders, who get 20,000 bonus miles if they make $1,000 in purchases within the first three months of card activation.
You can redeem your miles as a statement credit. As added perks, the rewards don't expire and you can carry a balance the first year without paying any interest.
Barclaycard Arrival Plus World Elite MasterCard's Rewards
Another good choice for frequent travelers is the Barclaycard Arrival Plus World Elite MasterCard's Rewards Card. You earn two times the miles on all purchases.
Right off the bat, new cardholders get 50,000 bonus miles if they spend $3,000 in the first 90 days of card activation. That adds up to a $500 travel statement credit.
The miles don't expire and you get 5% miles back every time you redeem, to use toward the next redemption. There's an $89 annual fee, but it's waived the first year. The card also has a 0% introductory balance transfer rate for 12 months if the transfer is made within the first 45 days.
Gold Delta SkyMiles Credit Card from American Express
For consumers who find themselves flying Delta most of the time, the Gold Delta SkyMiles Credit Card from American Express might be a good fit. It pays two miles for every dollar spent on purchases made directly with Delta, and a mile for every dollar spent on all other eligible purchases.
New card members earn 30,000 bonus miles if they make $1,000 in purchases within the first three months of card activation and earn an extra $50 statement credit just by making a Delta purchase during that time.
There are also some air travel-specific perks as well. Card members can check their first bag for free on every Delta flight, saving $100 on a round-trip. They also enjoy jumping to the head of the line with priority boarding.
There's a $95 annual fee, but it's waived the first year.
Consumers should be aware by now that there are big advantages to using a rewards credit card, and in particular, a card that rewards certain things.
For example, most consumers are probably better off with a cash-back credit card, which pays as much as 2% on all purchases or as much as 5% on certain categories.
But frequent air travelers might profit more from using a card that rewards in miles. We've identified three such cards that are worth a look.
Consumers who carry ...