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Credit Card Loyalty Schemes |
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Why You Must Choose the Right Credit Card
Many people today use credit cards not only for daily spending on groceries, fuel and other necessities, but also to make bill payments for electricity, telephone and other services, which are of a recurrent nature. Armed with a credit card, you can even trade on the stock exchange! Granted that credit cards give you immense flexibility in spending, and come with a battery of discount and cash back schemes that may be hard to resist, you can very easily get into a serious debt trap if you choose the wrong card or fail to pay your bills on time. Always act responsibly. To be a savvy card user, you must be sure to consider all the possible charges and loyalty rewards offered by a card before you select one, and then proceed to get the best out of the card by optimising your spending and payment behaviour and thus the rewards and loyalty points offered.
Some Useful Features of Credit Cards
Most cards now come with a zero annual fee, which is ideal if your shopping needs are low. If on the other hand, you expect to use your card extensively, a card with a small annual fee that offers bonuses on the amount spent, such as travel points, vouchers or cash back offers, would be a better option for you. As a higher spender, you'll be able to recover the annual fee several times over in the form of cash back offers and reward point redemptions that can be obtained through the exclusive use of the card for all or much of your spending. Alternatively, you might prefer a card that comes with an interest holiday or grace period, and subsequently ensure that you always pay by the date specified after which interest will begin to accumulate.
What are Loyalty Schemes
Credit card companies stand to make a small margin of profit every time a card holder makes a purchase using the card. In order to encourage their customers to continue using their specific card in preference to any other card, issuers are willing to pass down a percentage of the profits back to their customers by way of cash back offers and reward points. They enter into relationships with major hotel and airline companies, high street and online stores and other well known providers of goods and services, to allow them to offer services and products at discounted rates every time a customer uses the card to make a payment. All three parties stand to benefit from this arrangement. The card holder is pleased to get additional goods and services by way of rewards at a reduced cost. If wisely chosen, these can translate into substantial savings when added up over the year. The credit card issuer benefits from increased transaction volumes and revenue. The partner store, airline or service provider may gain access to a new potential customer, build loyalty with an existing one and in many cases will also generate additional revenue through the additional sales achieved via the card issuer.
Comparing Loyalty Schemes of Major Credit Card Companies
Different credit card companies offer substantially different loyalty schemes and rewards. The same company may also issue cards with a different combination of rewards and offers. The following are some recently announced example loyalty schemes by some of the UK's major credit card issuers:-
A Platinum Visa Card : Cash back at 0.4%, 0% p.a. on balance transfers for a year and 0% p.a. on purchases for 4 months (2% fee).
A Major Online Store Branded Card : 1 loyalty point for every £1 spent at the store, 0.5 points for £1 spent elsewhere. £15 store gift certificate for every 1,500 points.
A Visa Credit Card : 0.10% APR on purchases
A Mastercard : a flight travel point for every £10 of purchases on the card statement. These points will be valid for 3 years from the date at which they are added to the account.
A Platinum Credit Card : a free iPod© Shuffle when you spend £500 or more on the card within the next 6 weeks.
Conclusion
Major credit card companies today offer a huge range of rewards and cash back packages that are almost too tempting to resist. A savvy credit card holder can obtain very significant additional benefits from a card by choosing a card provider whose loyalty offering including points earnings rates and redemption opportunities most closely suits their own personal spending and repayment habits. With a carefully planned spending approach with the card, the redeemed rewards can result in sizeable savings or other gains when looked at over a year or so.
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