Credit Card Incentives
Credit card companies will offer incentives so
that people will want to get their card. Some
of these incentives are:
- Rebates (money back) on the purchases you
• Frequent flier miles or phone-call minutes
- Additional warranty coverage for the items
• Car rental insurance
• Points toward car purchase
- Travel accident insurance or travel-related
- Credit card registration, to help if your
wallet or purse is lost or stolen and you need
to report that all your credit cards are missing
In addition credit card companies may offer insurance
to cover payments on credit card balances if you
become disabled, injured, unemployed, or die.
Premiums are a percentage of the amount owed on
the card and are not necessarily a good deal.
You may also get insurance to cover the first
$50 of charges if your card is lost or stolen.
Under federal law, you are not responsible for
charges over $50.
Make sure you study these offers carefully to
decide if they are right for you. Don’t
pay for something you don’t want or don’t
Are Rebate Cards a Good Deal?
These offers can be a great thing or a very
bad idea depending, in part, on your spending
The best way to use rebate and incentive cards
are to pay off your balance every month. Get a
card that has offers which will work for you and
make sure they are making solid offers not pie
in the sky. Air miles are a good example. These
can be useful but some cards and airlines make
them impossible to use. So read the fine print
on all offers before accepting one.
If you don’t pay your bill off monthly,
consider whether the "incentive" could
actually be obtained at less cost for cash. For
example, Smart Money reports that if you charge
$8,500 a year on a credit card carrying an average
balance of $1,500, you would earn enough frequent-flier
miles to get a free domestic ticket in three years.
But you would also be paying $265 in interest
each year (17.65% APR), plus a total of $150 in
annual fees. That means the "free" ticket
would end up costing $945. For the same money,
a consumer may be able to buy three round-trip
tickets from New York to Los Angeles!
Remember the card companies are in business
and their business is, money, so no matter how
it looks on the surface they will not be giving
it away for free. Don’t spend money to save
money. Only take incentives or rebates that you
will use and pay your card off every month.