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Reward Card Red Flags
You use a credit card on a regular basis, so why not choose one that will reward you for it? A low interest rate and good service are no longer enough to convince people to choose a certain credit card; these days, customers are rewarded with free gifts, discounts, and points that can be redeemed towards merchandise, cash, travel, and countless other gifts. And while many rewards cards are truly great, others might not be such a good deal when you read the fine print and the numerous terms and conditions. Here are some red flags that could indicate that rewards card isn't such a good choice after all.
Red Flag #1-Points have an expiration date
A significant number of rewards cards use a point system. The cardholder accumulates points by making purchases, and then redeems them for a reward, whether it be an airplane ticket or a gift certificate for their favorite store. When you're shopping around, make sure there is no expiration date on earned points. Unless you use your card all the time, it may take a while to earn enough points for a free gift. And with expiration dates, all those points can literally disappear overnight.
Red Flag #2-Points must be redeemed in increments
This is a somewhat common tactic used by issuers of rewards cards. The terms go something like this: You earn 1 point for every dollar you spend. Points can be redeemed for rebates or towards discounts at hotels. The catch? They can only be redeemed in 5,000 point increments. Usually, this means that the cardholder will be stuck with a huge number of points they can't use. It may take years to collect enough points to earn a reward. And if there is also an expiration date on points, you should definitely keep shopping around.
Red Flag #3-The number of points needed for a reward is extremely high
Let's face it. Credit card companies aren't in the business of giving their customers something for nothing. It's unrealistic to expect that. Often, however, the number of points that you must earn to get a decent reward is simply unrealistic. Look at the rewards offered by the card issuer and the number of points you need for them. If you earn 1 point for every dollar and you need 10,000 points for a ten dollar gift certificate, that's a definite red flag.
Another related tactic used by credit card companies is offering "more points" than other cards. For example, card A offers 1 point for every dollar spent. Card B offers 5! The choice is clear. Right? Not necessarily. Again, look closely at the number of points needed for rewards. If rewards for card B generally require five times as many points, it's not such a good deal after all.
Red Flag #4-Blackout dates
Blackout dates are normally associated with travel rewards like plane tickets and hotel stays. You've saved up your points all year so you can help pay for your trip to the Caribbean in the spring. Then, you find out that you can't use your points during those dates. Blackout dates are not unusual with these types of cards, so find out the card issuer's policy before you commit. Otherwise, you may spend time earning a ton of points only to find out they are useless when you call to redeem them.
Red Flag #5-Points can only be redeemed at a certain location
Depending on the cardholder, this may not be a red flag at all. Many rewards cards offer programs that are aimed at very specific groups of people. For example, some travel rewards cards allow cardholders to accumulate points that can only be used towards travel with a specific airline. There are similar cards for stores and hotels. In some cases, this type of program is very beneficial to the cardholder. If, on the other hand, you're searching for a flexible rewards program, this should be a sign that you should keep searching.
Red Flag #6-Point limits
Some cards put a limit on the number of points that cardholders can earn during a single year. After that limit is reached, there are no rewards for making additional purchases. With so many rewards cards offering the opportunity to earn unlimited points each year, there is no reason to choose a card with limits.
Red Flag #7-High fees
Some rewards cards, like other credit cards, may require the cardholder to pay a yearly fee. Some also charge much higher interest rates than other cards. Unless you think you are going to use your card frequently enough that you can make up for the fees and charges with the rebates and/or rewards you will earn, it's probably best to choose a card with no annual fee.
Rewards Card: A final note
There are many great cards out there, but keep in mind that credit card companies are, above all else, out to make a profit. Therefore, while you may earn a gift certificate or even a free flight with your credit card, points will accumulate slowly and over time. While some card issuers are happy to offer their loyal customers a fair and reasonable rewards program, others are sneaky. The terms and conditions mentioned above are, quite often, meant to prevent or discourage customers from ever actually redeeming those hard-earned points. Take the time to look for red flags, choose a card that meets your needs, and avoid excessively high charges and fees to get the most out of your rewards card.
About the Author:
Paul Basco Provides Expert opinions and reviews to help you Compare and Apply for a Credit Card Offers online. At GettintingaCreditCard.com, we offer credit cards for bad credit, low apr credit cards, instant approval credit cards and much more.
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