Charging Up Freebies
Credit card rewards programs lure spenders to splurge
For Immediate Release: July 31, 2003
ROCKVILLE, Md. — In today's highly competitive credit card market rewards programs are increasing in popularity as a way to attract new customers. These programs promise airline miles, free shipping on purchases or cash back just for using the card.
"Rewards programs are becoming more and more common and the variety of programs available are almost endless," said Steve Rhode, president and co-founder of Myvesta.org, a nonprofit financial management organization. "No matter what kind of interests or hobbies you have, chances are there is a credit card out there for you."
According to Rhode, many people sign up for cards that offer airline miles as a reward even though there may be other cards with different rewards programs that are more suited to that individual.
"Airline mile cards are very popular but in reality one mile is worth about two cents and most of the miles go unused," Rhode said. "Other cards offer rewards like free gas, discounts at your favorite stores or free DVDs."
Many store credit cards offer a 10 percent discount on purchases you make the day you sign up for the card.
"When you apply for a credit card just to get a one-time discount you end up with another open line of credit that will tempt you to make additional purchases in the future," Rhode said. "If you applied for the card to get the discount and never plan on using the card again, it could hurt your credit rating by having another open, unused line of credit."
Rhode also warns about making purchases just to receive the perks from your credit card.
"You need to ask yourself if it's worth charging $1,000 worth of stuff on your credit card just to get $25 off your check at Red Lobster," Rhode said. "It's always nice when there are benefits for using a credit card, but if you're charging more than you can afford just to get the perks, those free rewards end up costing big bucks."
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MyvestaSM is dedicated to helping people create healthy financial lives. The organization provides a wide range of materials to inspire and inform people so that they can break down their barriers to financial and personal success. For more information visit Myvesta.org online.
