| Pay Credit Card Bills for Rewards |
| By Credit Federal |
Published
09/22/2009
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Debt Help
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Pay Credit Card Bills to get High Limit Rewards
If you pay credit card bills on time, consider applying for rewards credit cards to get reduced interest rates or points for paying on time. Usually credit card reward programs feature airline miles, gift certificates, or cash back for customers who make high charges on credit cards to get tons of points. Now, credit card companies are making different offers to consumers.
Credit card companies are dishing out lower interest rates, refunding interest payments, and using other methods as incentives for cardholders to pay their balances and make on-time payments. It is important to review all the details to see if you can benefit from the incentives offered.
Companies use rewards to help customers get ahead on their finances and to promote good financial fitness by giving customers choices to help them manage their debt. According to Michael Copley, he thinks the Simply Flexible card motivates cardholders to pay off more of their debts and attributes the company's relatively low delinquency rate to the product.
The Motiva card, according to Laks Vasudevan (Director of project management at Discover), motivates consumers to pay their bills on time and pay down balances. She says the card is best for customers who carry balances and are trying to pay them down. Discover also has online tools like the Paydown Planner which lets cardholders calculate what they need to send in each month to pay off their entire balances by their chosen target dates.
Card issuers like to give customers incentives so they will keep their credit cards for a long time and they like to offer incentives to help them manage card debt and their money. According to Ron Shevlin, a senior analyst at the Aite Group, companies must balance the profitability of consumers who carry a balance, and therefore pay interest fees each month, against the risk of those cardholders pose defaulting on their debts.
Rewards programs that encourage customers to maintain balances and make payments on time, like the Motiva card, may be the middle ground. According to the Aite Group's research, 57% of customers with rewards cards pay off their balances each month, 10% make only the minimum payment, and the remaining one-third of cardholders pay more than the minimum.
According to some credit card experts, consumers who carry balances should look for the lowest interest rates, regardless of the rewards programs. With the Simply Flexible card, for example, customers who pay less than 5% of their balances face the highest annual percentage rates, currently near 20%, which is much higher than the average credit card rate of 15%. According to TD Bank's Copley, it is up to the customer to decide whether the card is a good idea and whether or not they want to pay more than the minimum payment is their decision.
Credit cards that have incentives can help consumers improve their credit especially if they pay on time or only charge what they can pay off each month.
For customers who usually don't carry balances, it may be better to find credit cards with rewards programs that will fit their life-style. Review credit card offers for details:
American Express
Chase
Discover
MasterCard
Visa
The best decision when choosing credit cards with benefits, rewards, and incentives is to first know your credit score and paying habits and then seek out the credit card that can best benefit you.
If you cannot make credit card payments, consider options such as credit counseling, a debt consolidation loan or even chargeoff credit card balances after you negotiate debt settlements.
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