Credit Cards

[nobeing]

Jessica Dickler of  CNNMoney wrote a great article about credit card rewards today.  Credit card rewards are a real rip off What has your rewards card done for you lately? Not much most likely.

She talks of how the study found that confusing rules and restrictions make most reward cards more trouble than they're worth. And while cash back, gas and grocery rewards credit cards can offer some relief for costly essential items, they often carry higher annual percentage rates than traditional credit cards, Consumer Reports said.If the rates are high, the cost to carry a balance will often erase any savings the rewards program may offer," said Amanda Walker, senior project editor at Consumer Reports.And in addition to the complicated rules, fees and higher interest rates, customers are leaving unused rewards on the table. More than 41 percent of reward cardholders either rarely or never even bother to use their rewards, said a 2006 survey by GMAC Mortgage and Harris Interactive.

So in the end, a prime card is really one with a low interest rate. I'll take Joe's Credit Card (Juniper, Hsbc) at 8.99% over the so called prime cards like the prestigious American Express, Discover or Citibank at much higher rates with their faux rewards. It's time to redefine prime.  

[cheddar]

Rewards cards are not meant for carrying balances.  They never have been.

They typically have higher APRs (in order to pay for the rewards programs), but savvy consumers use rewards cards to accumulate the rewards, and then PIF to avoid paying any interest at all.

For long-term balances, low APR cards are obviously the better choice.

Message Edited by cheddar on 06-02-2008 08:16 PM

[fender]

If you PIF and use your rewards, its a great deal.. I dont doubt that most americans dont PIF and dont use their rewards though!

edit:

cheddar beat me to it! nos!

Message Edited by fender on 06-02-2008 11:05 AM

[cheddar]

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nobeing wrote:

So in the end, a prime card is really one with a low interest rate. I'll take Joe's Credit Card (Juniper, Hsbc) at 8.99% over the so called prime cards like the prestigious American Express, Discover or Citibank at much higher rates with their faux rewards. It's time to redefine prime.  

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If you're carrying a balance from month to month, then yes, the 8.99% card makes more sense.

If you're not carrying a balance, then it makes no sense at all.

[MidnightVoice]

When used sensibly, no AF rewards cards are free money (for me, gas, books and airtrips).  But I don't use them to carry balances, and I use all the rewards!!