Marketing channels are flooded with credit card advertisements promising attractive offers and incentives to prospective customers. With such a great deal of promotion heavy content on display, it would be beneficial if one could look past the advertising tactics to view the deals for what they really are.
Read on for the truth behind three common credit card marketing strategies.
Credit Card Interest Rates Add Up
Credit card interest rates advertised are most commonly misconstrued. These are monthly rates and they add up to a lot more when converted to APR or Annual Percentage Rate.
A credit card offered at a seemingly harmless 2.99 percent, for instance, amounts to a whopping 40 percent yearly.
For individuals who do not intend to pay off their balance on time and in full each month, it is crucial to understand this annual interest rate structure.
At such a high rate of interest, instead of using credit cards as a debt instrument it is in one’s best interest to consider other loans like non-salary transfer personal loans, which are offered at less than half that rate.
The 10% Cashback Comes with a Catch
Cashback reward on credit cards seems enticing, but the devil as they say, is in the details. Cashback feature has some very obvious limitations.
For starters, the 10 percent cashback is limited to certain spend categories. For instance, a grocery specific credit card will reward you with 10 percent cashback on grocery transactions but offer little to none on everything else.
Secondly, card issuers cap the amount of cashback you can accrue in a month. This means that there is a limited cashback amount that you can potentially earn every month.
Finally, the minimum spend criteria imposed on these cards defines the minimum amount you need to spend in each billing cycle without which cashback will not be rewarded.
The True Cost of Air Miles May be Steep
As appealing as the air mile program sounds, it needs to be thoroughly investigated with different airlines as well as your credit card provider before you sign up for it. Air miles collected through credit cards are valued differently by different airlines. In some cases, the worth of air miles is significantly less than what you spent to accumulate them.
Also, airlines have limited availability of reward sets, blackout dates, no option to redeem miles for partial payment of your booking, come with an expiry date and may require redemption over the phone.
In addition to the ones mentioned above, zero percent balance transfer and zero percent instalments are a few other offers that must be analyzed thoroughly before you opt in. The trick is to familiarize yourself with the fine print and not get lured by the promise of attractive rewards.