May 19, 2010
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News: Credit Card Companies Sitting On A Pot Of Gold
As signs of a recovering economy continue to surface, Americans who have managed to maintain a really good credit score will soon find themselves the target of credit card marketing campaign. It was only a year ago when the new credit card reform act was passed and lenders were threatening it would cause devastating effects. Consumers were warned that the new law would severely limit credit and significantly increase its cost. However, recent marketing activities indicate that credit availability is on the rise and lenders are sitting on a large pot of gold. Discover Financial alone handed out over $280 million over the past five months in its credit card cash back rewards program. A typical Discover cash back offer would give cardholders a 5 percent reward on select purchases up to $400.
Of course, reward dollars do not come without a price. The average Discover customer with a very good credit score is charged nearly 20 percent for charges and 25 percent for cash advance. JPMorgan & Chase's Freedom card will actually reward you $100 if you spend at least $799 in credit card transactions during the first three months. The credit card has a zero percent introductory offer for the first year and currently gives a 5 percent cash back on select retail categories; however, it can cost you nearly 30 percent if your monthly payment is delinquent. The American Express (AmEx) Blue Cash card can also earn you 5 percent cash back with no annual fee; however, credit balances will cost you 13.99 percent plus prime. If you want to take advantage of the AmEx Blue Cash reward, you'll need to spend at least $6,500 within a 12 month period.
Most credit card companies now offer a cash back reward program, the trick will be to find the right program to fit your unique needs. Be smart about what your needs are. If you typically carry a credit balance, getting the lowest interest rate possible will save you more than the best cash back reward. Closely examine the terms and conditions of the card prior to accepting any offer and pay close attention to any expiration dates.