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Free Credit Card Bonuses Are Pricey If You Fail To Pay Your Bill
By: Charles Essmeier
The credit card business is a competitive one. It is also a very profitable one
and the combination of the two explains why you seem to find a pre-approved
application in the mailbox just about every day. A new customer is worth a lot
to the companies that issue credit cards; most consumers will spend thousands of
dollars in interest during the time they carry the card.
Because the business is so competitive, many card issuers offer various bonuses
and incentives to help them acquire and keep customers. These incentives may
include frequent flier miles, discounts on baseball tickets, cash back bonuses
and more. For someone who has an interest in the particular type of bonus
offered, these cards may offer a better value than another card of the same
type. But consumers would be wise to remember that these bonuses are not offered
out of kindness, they are offered in the expectation that you, the consumer,
will pay the company far more than the bonuses are worth in interest. There is
no such thing as a "free" bonus; the companies expect you to pay for them.
The average American household has nineteen credit and debit cards and debt that
exceeds $9000. With that kind of debt, most consumers are clearly not paying
their bills in full each month. And by not paying in full, they are paying a
great deal of interest, as most bank cards carry interest rates that range from
10-30% per year. The "free" bonuses are funded out of the millions of dollars in
interest that are paid by consumers who don't pay in full.
On the other hand, if you are a savvy consumer, you can take advantage of these
freebies by carefully shopping for a card that has bonuses that suit your needs.
You can then use the card carefully by remembering to pay the bill in full each
month in order to avoid paying more in interest than the bonuses are worth.
Some types of bonuses include:
Baseball affinity cards - You can get a card with the logo of your favorite
baseball team, and even get a pair of free tickets just for signing up.
Cash back - The Discover card offers a cash rebate for a portion of the amount
you spend each year. This could amount to as much as 1% of the total amount
spent.
Extra warranties - Some cards, like American Express, offer extended warranties
for merchandise purchased with the card. Should the item break, you may get it
repaired or replaced at no charge.
These are but a few examples of the hundreds of different types of bonuses
offered by the credit card companies to try to entice you to use their card. The
offers are real and the benefits are great. If you like baseball, get the card
from your favorite team. If you like to fly, get a card with frequent flier
miles. Just remember that failing to manage your bill properly will leave you
paying far more than those bonuses are worth. Otherwise, that "free" plane
ticket could end up costing you thousands of dollars.
About the Author:
©Copyright 2006 by Retro Marketing. Charles Essmeier is the owner of Retro
Marketing, a firm devoted to informational Websites, including
http://www.End-Your-Debt.com,
a site devoted to debt consolidation, credit counseling, payday loans and
personal bankruptcy. |
