For people who use their credit
cards primarily for rewards, there's no shortage of good card options. From
miles to merchandise to mortgage payments, rewards can take almost any form -- though
that doesn't necessarily mean that card issuers will make racking up rewards
painless.
Today's cards benefit big spenders
and attentive card managers. For those willing to monitor their cards and
spending closely, there are more ways than ever to get rewards and maximize
points. Here are three trends that are shaping credit card rewards offers -- and
what you'll need to do to take advantage of them.
1. Cash is king, but it's not
always easy to maximize
Card issuers have rolled out plenty
of new rewards cards, but many have the same theme. It turns out that almost
nothing beats cash, says Nancy Beaver, vice president of rewards management at
Wells Fargo. "Cash has always been a traditional favorite, and it
continues to be a favorite," she says.
While 1 percent cash back is
standard with many cash-back cards, some cards are boosting rewards -- selectively.
Discover has long been the standard-bearer in this regard. For more than six
years, it has offered 5 percent cash back bonuses on rotating quarterly
categories from gas to dining, says Discover spokeswoman Kathryn Henry. Others,
including Chase Freedom and Citi Dividend Platinum,have followed suit
with similar offerings. It's a great deal -- as long as you're willing to sign
up each quarter, and you're not stymied by the limits (typically about $1,500
in purchases) that can curb your earnings.
Because companies want their card
to be at the front of your wallet, they're taking care to give you better deals
on your most frequent purchases. "We have card members who are passionate
about earning cash back on their everyday spending," says Chase spokesman
Rob Tacey. It's why his company -- and others -- offer greater rewards
year-round for the most common credit card purchases, such as gas, groceries,
dining, and travel.
But you'll need to do some serious
number-crunching to see if it's better to get 3 percent back on gas and 2
percent on groceries (BankAmericard Cash Rewards) or 3 percent on groceries and
2 percent on gas (Blue Cash Everyday Card). If you're a traveler, you might
like Chase Sapphire preferred, with double points on travel and dining. The
most diligent juggle several different cards, keeping track of the best
offerings on spreadsheets or sticky notes attached to specific cards with great
deals.
2. Introductory bonuses grow,
but ...
To lure in high-spending customers,
card issuers have ratcheted up introductory bonus and early spend offers, with
cash and travel awards worth hundreds of dollars.
Some come easy -- you can earn up
to six free nights at a Marriott property after a single purchase with the
Marriott Rewards Premier Visa Signature Card, for example. Southwest Rapid
Rewards Visa, meanwhile, offers enough points for two free flights after the
first purchase.
However, many require big spending
requirements. To get $500 in travel spending from the Chase Sapphire Preferred
card, for example, you'll need to make $3,000 in purchases in the first three
months to qualify. An introductory offer from Citi ThankYou Premier will net
$399 in airfare -- after $2,000 in purchases within 3 months.
Of course, once you've earned your
bonus, card issuers hope you'll stick around. Don't get too starry-eyed at the
promise of an early payday, says Capital One spokeswoman Sukhi Sahni. "Take
advantage of higher-than-average introductory rewards rates and sign-up bonuses, but use the permanent rewards earnings as a basis for comparing cards,"
she says.
3. Loyalty is rewarded
Many of the top reward cards have
hefty annual fees after the first year, including The Premier Rewards card from American Express ($175) and Citi Platinum Select AA Visa ($95).Combined
with the eye-popping introductory bonuses to new cardholders, it's increasingly
tempting for cardholders to hop from card to card, avoiding fees while still
reaping plenty of loot.
To entice customers to keep a card,
issuers have begun offering loyalty bonuses. A Southwest Rapid Rewards card
offers 3,000 miles on a cardholder's anniversary -- with a value that's almost
enough to offset the annual fee. Other cards provide yearly bonuses based on
rewards earnings.
Some card issuers offer bonuses to
customers who use more than one of the bank's products. Several Bank of America
cards, for example, offer customers a 10 percent cash bonus on cash rewards if
they deposit them into a Bank of America checking or savings account. According
to spokeswoman Betty Riess, it's a strategy that benefits both consumers and
the company. "[We] are focused on rewarding customers when they bring more
of their relationship to us," she says.
But
no matter how focused you are on maximizing your rewards earning, it's critical
to remember that the rewards are meant to redeemed. "Building rewards,"
says Capital One's Sahni, "is only worth it if you actually use them."
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