Profiting from Credit Card Gimmicks
2009-05-29 by Lee
2009-05-29 by Lee
Every company has a marketing gimmick up their sleeve. Cash back offers, free airline miles, and gas rebates are only the tip of the iceberg. The credit card industry spends more per customer than any other industry; it is a highly competitive industry that wants to give you money and take even more from you. But the benefit is that intelligent consumers will be able to circumvent the gimmicks and benefit at the loss of the credit card company.
Pro: The cash back credit card
The cash back credit cards are a favorite because cash can be spent on anything, at any time with no restrictions. Most credit card companies offer 1% cash back on purchases, and some offer larger percentages on gasoline, fast food, and groceries.
The best cash back cards have a 5% gas reward that gives the customer a ???refund??? of 5% on total gas purchases. This can certainly add up over time; it is like a 5% increase in gas mileage or a continuous 5% coupon on gas. When gas is $3 a gallon, cash back credit cards drop the price to $2.85, certainly a great benefit to your pocket.
Con: Miles aren???t really miles
Airline cards can be the most deceiving. Most airline cards reward their customers in the form of ???miles,??? which is usually 1 mile per dollar spent. However, do not be fooled; these credit card miles are not real miles, but actually points that can be redeemed for air travel. Do not expect to travel one physical mile for each dollar spent with your credit card; in actuality, one dollar will earn you 1/10000 of a night in a hotel room. Miles are used synonymously with a penny value on these airline cards.
Pro: Save on Groceries
Grocery credit cards are obviously beneficial. The cards usually give 1% - 5% cash back on each dollar spent at the grocery store. These credit cards are gold to the average family, as 1% - 5% can cut some serious dollar amounts off your grocery bill.
Store credit cards from department stores, such as WalMart, Kohls or Sears, usually come with some benefits or discounts that can be used in store. Certain gas stations have credit cards that will add up to more free gas over time. These are great credit cards in terms of rewards, but are usually only to be used at one place.
How to make the most from credit cards
To benefit most from the credit card offers, you would obtain several specialty credit cards. For example, you would have one for your gas, and another for your groceries. The benefits offered by credit card companies come in handy, but only if balances are paid off each month and no interest is incurred. Notice that just one month of interest on most credit cards completely negates the benefit of rewards. Credit card companies would not offer bonuses if they did not make the companies more money.
Balancing rewards can be difficult, but it does pay off in the end. Most credit card companies make customers wait until they have reached a certain amount before they qualify to collect rewards. All of this information should be cleared up on your credit card statement or in the signup terms and conditions.
Pro: The cash back credit card
The cash back credit cards are a favorite because cash can be spent on anything, at any time with no restrictions. Most credit card companies offer 1% cash back on purchases, and some offer larger percentages on gasoline, fast food, and groceries.
The best cash back cards have a 5% gas reward that gives the customer a ???refund??? of 5% on total gas purchases. This can certainly add up over time; it is like a 5% increase in gas mileage or a continuous 5% coupon on gas. When gas is $3 a gallon, cash back credit cards drop the price to $2.85, certainly a great benefit to your pocket.
Con: Miles aren???t really miles
Airline cards can be the most deceiving. Most airline cards reward their customers in the form of ???miles,??? which is usually 1 mile per dollar spent. However, do not be fooled; these credit card miles are not real miles, but actually points that can be redeemed for air travel. Do not expect to travel one physical mile for each dollar spent with your credit card; in actuality, one dollar will earn you 1/10000 of a night in a hotel room. Miles are used synonymously with a penny value on these airline cards.
Pro: Save on Groceries
Grocery credit cards are obviously beneficial. The cards usually give 1% - 5% cash back on each dollar spent at the grocery store. These credit cards are gold to the average family, as 1% - 5% can cut some serious dollar amounts off your grocery bill.
Store credit cards from department stores, such as WalMart, Kohls or Sears, usually come with some benefits or discounts that can be used in store. Certain gas stations have credit cards that will add up to more free gas over time. These are great credit cards in terms of rewards, but are usually only to be used at one place.
How to make the most from credit cards
To benefit most from the credit card offers, you would obtain several specialty credit cards. For example, you would have one for your gas, and another for your groceries. The benefits offered by credit card companies come in handy, but only if balances are paid off each month and no interest is incurred. Notice that just one month of interest on most credit cards completely negates the benefit of rewards. Credit card companies would not offer bonuses if they did not make the companies more money.
Balancing rewards can be difficult, but it does pay off in the end. Most credit card companies make customers wait until they have reached a certain amount before they qualify to collect rewards. All of this information should be cleared up on your credit card statement or in the signup terms and conditions.
