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It turns out that a bad economy is even affecting the way people collect and turn in their credit card rewards points. In times past, Americans used to accumulate and stock pile their points and turn them in all at once for grand get-aways and vacations to Europe and top U.S. destinations; the recession has changed this habit for the time being, however.
Now, for the first time on record, more consumers in this country are using standard credit card rewards programs instead of airlines’ frequent flier programs. This information comes according to the 2009 Loyalty Marketing Census that was conducted by Colloquy, a company based in Cincinnati, Ohio that provides loyalty marketing information.
Cash back bonuses and points that can be redeemed for groceries and gasoline are turning out to be the new top-pick for rewards, giving consumers real help in a tough economic market. These programs are much more beneficial to credit cardholders than mileage and travel programs because they offer you savings on things you’re buying everyday anyway. If you’re looking for ways to save even more money, switching to a new rewards credit card is something you may consider.
Cash Back Credit Cards
There are dozens of ways companies organize their rewards programs, although most allow the credit cardholder to earn points on every dollar spent. These points can then be redeemed for gift cards or discounts. The number one rewards program in this market is definitely the cash back rewards program, which helps boost savings for people that have fallen on hard times. These credit cards give you the most value because they let you use your savings on anything you want, instead of forcing you to choose between gift cards or travel. Cash back rewards are also great because they give you better returns if you don’t spend large amounts of money. Airline tickets, however, may require you to spend tens of thousands of dollars just to earn a simple roundtrip ticket. If you want to save money with a cash back card and are looking for a simple and easy to use program, look for credit card issuers that automatically issue you a cash back rebate. Also try to find a credit card that offers the highest cash back on items you spend on most, like gasoline or groceries.
What to avoid
Although rewards cards can be great news, there’s a number of things you should watch out for that can completely eat up your savings. First, never get a rewards card that has an annual fee. There are plenty of good rewards cards with no fee, which can be as high as $100 if you aren’t careful. That can automatically cut down your savings in half, making the program hardly worth it. Another thing you need to watch out for is an excessively high APR, which can also erase your savings. If you pay off your debt every month this isn’t too serious a concern, but anyone that carries a balance should look at the APR right off the bat. Lastly, avoid the pitfall of accumulating debt simply to earn a bit of cash back. This is silly and can end up costing you thousands.
How the Credit CARD Act applies
The new Credit CARD Act of 2009 plays a role in the future of rewards credit cards because it places limitations on the programs to keep watch on them. No one is sure whether the law will have a positive or negative effect yet, although it will probably end up helping consumers by keeping desperate consumers away from credit cards with high interest rates and fees. No matter how the Act changes rewards programs, they remain a great way for people to earn a bit of extra change while spending on everyday items.