Finance, Loan, Debt and Credit.

December 28, 2010

How Credit Card Incentive Programs Work

Filed under: Credit — Tags: , , , , — admin @ 7:21 pm

With the popularity of credit cards today, it’s no wonder that there are a variety of incentive programs offered by different card companies in an effort to get consumers to choose one company’s cards over another. Some incentive programs offer you cash back on your purchases, while others offer free airline miles or discounts on certain items or from certain retailers… but incentive programs don’t do much good if consumers aren’t sure how to use them or whether one program is better for their needs than another. Below you’ll find an overview of what incentive programs are and how they operate, as well as examples of some of the more common benefits offered by these programs and some of the advantages of each.

What Incentive Programs Are

Put simply, incentive programs that are offered by credit card companies are just marketing tools used to try and get people to choose particular cards. They are often combined with lower introductory rates in an effort to draw in more customers, and are usually dependent upon the cardholder’s ability to keep their card account up to date and their payments current.

Cash Back Programs

One of the earlier incentive programs that were used by credit card companies was the cash back incentive… it is also one of the more popular programs. Cash back incentive programs work by giving cardholders a portion of the amount that they pay on each purchase back, usually once per year. The percentage of each purchase is generally quite low (around 1%, though sometimes as high as 1.5% or 2%), but over the course of a year that small percentage can begin to add up. Some cards completely forego the annual payment, though… they instead pay their percentage back as soon as each purchase clears the processor.

Airline Miles Programs

Another of the early incentive programs, cards that award airline miles or frequent flyer miles with major airlines have always been popular… especially with businessmen or others who travel by plane on a semi-regular basis. Some cards only allow trips to be booked at certain times or on certain dates, though a growing trend is to allow customers to use their built-up airline miles whenever they wish. This can be especially useful for individuals who take regular vacations… the purchases that they make throughout the year can be utilized the following year to pay for vacation travel.

Discount Programs

As more retailers and major manufacturers have become aligned with different credit card companies, a number of cards that offer discounts with certain retailers or with certain types of products have flooded the market. Automotive manufacturers may offer one type of card that entitles cardholders to a discount on that make of vehicle, whereas chains of department stores might have another card that gives customers a discount on all of the items that they purchase. Discount cards remain one of the more popular incentive cards on the market, and are often used for purchases with the retailers who are partnered with their issuers.

Other Programs

In addition to these common incentive programs, there are a variety of other incentive programs that various credit card issuers might offer. Some of these have a mass appeal, such as automotive roadside assistance, whereas others might have a more limited appeal such as making donations to specific charities. The benefits of the various incentives should be carefully weighed before deciding on one particular program, as well as the usefulness and the likelihood that it will fit in with the way that you usually shop with your credit cards.

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December 17, 2010

Credit Card Interest Rates – Based on Four Different Factors

Filed under: Credit — Tags: , , , , , , , — admin @ 5:20 pm

A few of the banks that received federal government bail out money are raising credit card interest rates and fees, thus, angering some consumer groups and drawing the attention of a Congressional Oversight Panel. If your rates have been recently increased, debt management can help you manage your re-payments.

Rates are usually based on four different factors- your credit rating, your debt to income ratio, your employment history, and re-payment history. Interest rates are usually tied to the US Prime Rate, that is the interest rate set nationwide by the Federal Reserve Board (FRB). Credit Card Interest is usually calculated at the end of your statement period, and then charged to the consumers account on the last day of each statement period. Good management of your credit will have a definite impact on the credit card interest rates you qualify for.


Issuers have been drawing fire for raising up interest rates on card holders who aren’t even behind on payments, but whose credit scores might have fallen for different reasons. Debt counseling, or signing up for a credit management plan, is becoming very common in today’s economy. Lenders usually will grant lower interest rates on the condition that you have been making payments on time and continue to make the fixed monthly payment until the debt is paid in full. Companies have also been affected by the down-turn in the economy and because of this they are tightening restrictions to get credit and are even raising interest rates for a lot of card holders.


If you’re currently carrying a balance on your credit cards, even occasionally, the interest rate is the main key to controlling your debt. If you’re already behind on payments or have already been sent to collections, it is imperative that you contact a debt settlement company. Late or missed monthly payments can lower your credit score, which in turn can, affect the interest rate you pay on credit cards. One of the benefits of a debt settlement plan, other than the lower interest, is the willingness of many lenders to accept a lower pay off.

Now you should have a better understanding about credit card interest rates, it’s still wise to pay the total outstanding balance every month. However, financial experts recommend, cutting credit card spending. A tragic number of consumers are unaware that they have some control over their rates.

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