Understanding Credit Card Loyalty Schemes
By: Stephen Pratley

The Process of Selecting a Credit Card

A huge number of card providers have jumped into the fray, and are issuing all manner of credit cards with a passion. There is such a wide array of cards to choose from that you would do well to first and foremost be clear on what your spending pattern is likely to be. A card that announces a zero interest rate may at first glance appear to be the right one for you, but on further inquiry, you may be aghast to learn that this is only an introductory offer, and six months down the line, you will be liable to pay interest at the monstrous rate of 18%. Study all the features and offers and carefully weigh the pros and cons before you make a firm decision based on your own habits in both spending and in settling your bill.

Credit Card Features

The basic features of most credit cards that warrant attention are a) the annual fee, b) APRs, c) Penalty charges, d) Reward points, and e) Cash back or loyalty offers. The vigilant card user can opt for the best available combination of low or zero annual fees and cash back offers that represent discounts on the purchases made. Those with a laissez faire approach to all financial matters have to be particularly on their guard, both while making a choice of card and in its subsequent usage. Any delay in the timing of your bill payments will cost you heavily. If you are likely to regularly leave a balance on the card, the best way to safeguard your interests would be to pick a card that has the lowest possible APR. The annual percentage rate (APR) indicates the annualised rate of interest on the balance that you carry over to the next billing cycle whether accumulated through retail purchases, on a cash advance, or when you transfer a balance to/from another card. It is rarely wise to use the card to generate cash advances unless the situation really warrants it. The reason for this is that APRs on cash advances are generally very high, and your interest ‘meter’ begins ticking away right from the word ‘go’. A savvy user can maximise the benefits available on all cash back offers, travel rewards and other loyalty points by being on the alert for every opportunity as it presents itself.

Loyalty Schemes Defined

Different credit card products address the needs of consumers of different income ranges and spending patterns. Some cards may not waive the annual fee, but may instead offer appealing loyalty schemes that may be of interest to you. A card holder accumulates loyalty points as he or she uses the card to buy goods and services. When the reward points build up to a certain level, the card holder gets to choose from a range of products or services that will be available to him/her free of charge, such as branded products; household appliances; or even a free airline ticket, or a two night vacation for two.

Comparing Loyalty Schemes of Companies

Credit card companies are coming out with a myriad of schemes targeting new and existing customers. Consumers are attracted by the freebies and cash back options, on offer, which are assuming ever more novel configurations by the day. Some examples of the loyalty schemes offered by current credit card companies are:-

• 2 loyalty points for every £2.50 spent on the card at a specified establishment; 0.4 points for £1 spent elsewhere; £25 gift certificate for every 2,500 points
• Cash back at 0.6%, & 0% p.a. on purchases for the holiday season (2% fee)
• A free MP3 player when you spend £450 or more on your card over the next six months
• Return flight on your first purchase within 45 days; and an additional return ticket if you spend £4,750 or more in a year
• One Flying Rewards point for every £12 of purchases appearing on the card statement, with a validity of 3-years.

Conclusion

Credit card companies are bringing out innovative new loyalty schemes and reward packages to grab the attention of new customers as well as to make sure that their existing cardholders remain loyal to them. Most credit card users do not however pay close attention to offers available and end up losing out, selecting a card that doesn’t match their own spending habits and profile particularly well. In order to derive the best advantage out of any card, choose the right one! Go through the small print, check the key features and criteria (including of course the rates) and look for a card which will reward you well for your own personal spending behaviour.

Article Source: http://www.ArticleJoe.com

Stephen Pratley is Marketing Manager at ipoints With the ipoints credit card, you can earn ipoints whenever you use your card online or offline. Other major card providers also allow you to earn ipoints. Find out more at www.ipoints.co.uk/earn-ccard_loans and earn Loyalty points on Credit Cards and Loans. ipoints is the largest Internet-based rewards programme in the UK with over 1 million UK members and works with more than 200 major clients both online and offline.

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