4 credit card trends that can save you money
November 22, 2010
Credit card companies are always looking for new ways to draw customers or to get current cardholders to charge more of their purchases. Besides profiting on interest and fees you pay, issuers earn revenue from merchant transaction fees every time you swipe your card. The more you charge, the more money they make.
Here are four ways credit card companies are trying to get more of your business:
1. Rotating credit card rewards
A growing number of cash-back reward credit cards tout bonuses for spending in certain categories, which rotate each quarter. The Discover More card, for instance, promises 5 percent cash back on travel January through March; home and fashion April through June; gas, hotel, movies and theme parks July through September; grocery and drug stores in September; and restaurants and fashion October through December. The Chase Freedom and Citi Dividend Platinum Select credit cards feature similar rotating 5 percent cash-back programs.
Read the issuer's instructions on how to take advantage of the program and check how much the cap is. You may need to enroll to qualify each promotional period.
2. Interest rate rebates and discounts
Some credit cards are offering interest rate discounts for paying your bills on time. The Citi Forward card, for instance, lets you earn a 0.25 percent interest rate reduction on purchases when you use your card, stay under your credit limit and pay at least the minimum amount due on time for three billing periods in a row. The purchase rate can be reduced 8 times for a total reduction of 2 percent.
Keep in mind issuers can yank the interest rate reduction even if you're just a day late paying your bill, and the reduction does not apply to the interest rate for cash advances or balance transfers.
3. More 0 percent introductory credit card offers
If you've got good credit, then expect to see more credit card offers in your mailbox. The Synovate Mail Monitor says issuers sent more than 640 million offers to U.S. households in the second quarter of this year, an 83 percent increase over the same period in 2009. Among those offers, 71 percent were for credit cards with introductory low rates, the highest proportion of such offers since the credit card tracking service began following the data 22 years ago.
Credit cards with 0 percent introductory rates are hard to pass up, but beware of fees for transferring balances, usually a few percentage points of the transferred amount. Calculate whether the fee would wipe out any savings on interest before you take the deal.
4. Longer promotional periods
Promotional periods for introductory rates are getting longer, with many exceeding well over a year. The Citi Platinum Select MasterCard features a 0 percent introductory rate on balance transfers for 21 months. Note that some offers include longer promotional periods for balance transfers than for purchases. Make sure you understand how the low rate is applied.
Read the fine print of any credit card offer, follow the issuer's rules for getting the rewards or promotional rates and stick to your budget to take advantage of new offerings. Don't let the deals for extra cash back or low interest rates on credit cards lure you into over-spending.
