You’ve heard about new laws on credit cards for 2010 in the media during the past couple months, and while it can be rather confusing on what everything is all about, the credit card industry is changing, and it’s changing fast. If you’re like me, and you can’t keep up, I wanted to show you what’s changing in terms of reward credit cards, since I’ve been working with them for a few years now.
Credit Card Reward Points
The rewards are dying on credit cards
Rewards won’t fade away, because competition will always make them strong, but you’re not going to get much for what you could have received in the past. For example, a few years ago, I was able to get a $100 gift card with 10,000 points. Today, that same gift cards is 12,000 points. You’re probably thinking, “It’s only a 2,000 point difference!” Well, if you have a card like mine, it’s 1 point per dollar on most purchases. That’s going to be an additional 2,000 dollars to get those additional points.
Watch out for the fees
Some credit card companies are trying to sneak on fees onto the cards you already carry. Make sure that you look out for letters coming in the mail that are stating that they are going to charge you just to carry the card. If you don’t use it often, cancel it! If your rewards make up for the annual fee, and then some, you may want to keep it, or consider other alternatives.
The good side
Now, congress passed this bill in hopes that they can help the average consumer. You no longer will see interest rate hikes, no more universal defaults, as well as more time to pay off your monthly bills.
How can I find the perfect rewards credit card for myself?
Read the terms
This sounds like a no brainer, but so many applicants just don’t read the terms. You have to read the terms and conditions to know what you’re getting yourself into. Credit card companies are in it for the money, and they want to persuade you in every way possible.
The rewards ALWAYS change
Take a look at 10 best credit cards for reward points, and I can guarantee you that 9 of the 10 have introductory rates. Why do they do this, you might ask? They do this because they know you’re going to look at the rebate, and think you’re getting it for life. Well, guess what? This isn’t the case. I had a card a few years back where I had 10% off per purchases for the first 30 days, and after those 30 days it fell to 1%. This happens to a lot of people. You want to look past the intro rate.
Know how the rewards work
These can kind of tie in with the rewards changing. You may find that one credit card company will tell you that you get 5% off, but what you don’t know is that you have to spend $5,000 a year just to get this rate. While it can be frustrating to play these games, you’re going to find that no card companies are going to come forward, and hold your hand. A credit card application isn’t straight forward anymore, and instead it’s a game.
Read the reviews
The Internet is just filled with reviews. While I know that most of them are indeed negative, you want to look for the positive. Trust me on this one; you can generally get a great vibe on if a card is going to be good, or bad. If you get a good vibe from the card, you’ll want to apply for it. If the vibe just isn’t there, you may want to steer clear!
While everything is going to be clearer sooner or later, make sure that you know what your card is doing. Don’t throw away letters in the mail that come from your credit card company, because it may be some bad (or good) news. Reward cards are here to stay, but they won’t be anything like they were in the past.
Guest Post by Tom Tessin, who runs and operates Find Cash Back Cards , a cash back rewards card portal showcasing some of the best rebates cards on the market.
Securities offered through LPL Financial, Member FINRA/SIPC.
