Loyalty Credit Cards
What are Loyalty Credit Cards? What are the advantages of using Loyalty Credit Cards? What are the disadvantages of using Loyalty Credit Cards?| What are Loyalty Credit Cards? | Top |
Loyalty credit cards operate in a similar fashion to reward credit cards, where by, the more you spend on the card, the more points you receive. How loyalty credit cards differ from other types of reward credit cards is, where you can use the loyalty credit card when purchasing goods or services. With a loyalty credit card you are tied to a particular shop or store, or group of shops or stores as to where you can use you loyalty card to purchase goods and services. As the name suggests, the issuer of the loyalty credit card wants you to remain loyal to the store or chain of stores that issued it. Again, as with a reward credit card, the more you spend with it, the more points you will receive to use for whatever the loyalty credit card provider is offering, these could include discounts, special offers and promotions associated with the store or stores that issued the loyalty credit card.
| What are the advantages of Loyalty Cards? | Top |
As with all reward credit cards, the more you spend, the more points and discounts you will earn. However, this is not an excuse for you to open the floodgates and go on a wild spending spree. Take it steady and do not let your heart rule your head even though the more points you earn, the more you can get with them. But what exactly can you spend your loyalty points on? Make sure that the points that you earn through spending allow you to get something that you actually need or want.
If your loyalty credit cards give discounts for usage, it maybe the case that you can acquire a discount on regular purchases like grocery shopping. This could earn you that bottle of red that goes down so well.
| What are the disadvantages Loyalty Cards? | Top |
Just what exactly is a ‘point’ worth? Some loyalty credit cards offer points which have very little monetary value, but because the loyalty credit card companies do not have to advertise the actual value of a point, this can make it very misleading for customers to understand just how much they are being ‘rewarded’ for being loyal.
What you use your loyalty card for has a profound impact on the way interest is accrued, for example, cash withdrawals taken from your loyalty card account are classed as ‘instant cash transactions’ and as such will incur interest straight away, even though you diligently pay off your outstanding balance every month.
Because of the actions of ‘rate tarts’ who continually changed their credit card provider to take advantage of interest free transfer of balances, most credit card providers including loyalty credit cards still offer interest free periods on transferred balances, but they now charge a transfer fee which varies between a set fee of around 50.00 GBP, to a percentage of the transferred balance of around 3%.
The majority of loyalty card providers don’t raise an annual fee for their services, but it pays to make sure that the very one that you are applying for, is not the exception to the rule.
