Membership Rewards Credit Cards
Membership rewards are a common incentive used by many banks
to entice you into using your credit card more. The more often you use
your card, the more points you earn hence the greater the reward you can
redeem. These rewards range from cinema tickets to air miles and
shopping vouchers. Although these aren’t significant rewards, if you’re
likely to use your credit card on a frequent basis, they can be a
worthwhile bonus.
Typically, reward cards have a higher rate of interest somewhere around
15% to 20% p.a., though do offer other perks alongside reward points.
For instance, some offer complimentary travel insurance or greater
protection against card loss abroad.
Reward cards generally do not carry an annual fee, though this can be
offset by additional charges, such as commission on foreign currency
transactions or handling fees on cash transactions. You are likely to
encounter a number of these charges on your average credit card, though
the weighting of these fees can be at a premium on reward or high credit
cards.
You can also often earn bonus points by using your card with certain
retailers. However, it should be stressed that spending extra in order
to earn reward points is only profitable if you are able to pay off your
credit card on a month by month basis. The increased rates of interest
make carrying a debt forward costly, which will quickly outweigh any
benefits earned via the reward scheme.
Reward cards are more suited to those who use their credit card on a
frequent basis and carry forward little or no debt on a monthly basis.
The rewards can be few and far between, though if you can avoid interest
and additional charges for other services, are a welcome extra. |
