'Don’t Settle for 1% Cash Back on Credit Cards' (WSJ)
Mar 19, 2015, 9:25 am
#1
Original Poster
Join Date: Oct 2013
Posts: 1,322
'Don’t Settle for 1% Cash Back on Credit Cards' (WSJ)
Nothing really here that this forum's readers don't know already, but will no doubt boost these issuers' business. From WSJ:
Don’t Settle for 1% Cash Back on Credit Cards
ByAnnaMaria Andriotis
The credit-card rewards wars are heating up. A growing number of credit-card issuers are rolling out rewards programs that promise to give card users more cash back for their purchases.
The latest addition is Citizens Financial ’s newest credit card, announced on Wednesday, that offers cardholders 1.5% back on every purchase. The Cash Back Plus World MasterCard doesn’t cap the dollar amount that borrowers can get through this rewards program, and it allows them to get up to 1.8% cash back in total if they use the card at least once a month and arrange to have the rewards automatically deposited into a Citizens checking, savings or money-market account.
With cash-back rewards cards, card issuers pay a certain percentage of the dollar amount that cardholders spend with their card. On average that figure was just shy of 1% during the fourth quarter of 2014, according to credit-card comparison website CardHub.com.
But consumers will find a growing list of cards that offer more. Citigroup , for example, launched the Citi Double Cash card, which gives card users a total of 2% back, last August. Cardholders get 1% back on each purchase and another 1% back when they pay for it. Capital One Financial launched the Quicksilver card in 2013, which offers 1.5% cash back on every purchase.
Citizens Financial is a relatively small player in the credit-card market. It ranks 25th in U.S. credit-card purchase volume for 2014 among Visa and MasterCard issuers, with nearly $4.7 billion in card purchases made last year, according to The Nilson Report, a payments-industry newsletter. Citi and Capital One, in contrast, rank third and fourth respectively.
The three issuers’ recent rewards offerings don’t have certain restrictions often found with cash-back programs. Cardholders can earn the rewards on every type of purchase made using the cards, and there are no dollar caps on how much cardholders can earn in cash back.
In contrast, several cards offer rewards of up to 5% or 6% back but do so only for certain categories of businesses, like supermarkets or gas stations, or on a rotating group of retailers or category types. Those deals can make sense for consumers who spend a lot within such categories or at certain stores. But those who don’t often end up getting just 1% back.
The latest offers come as banks pay more attention to how their cards are being used. Citizens, for example, says its card will replace a credit card it previously offered that provided 5% cash back on certain categories only during the first 90 days after issuance. Rewards on all purchases then dropped to 1%.
The bank says it found that many of its existing customers were signing up for the card but weren’t using it much. “While we’ve done well getting [our] credit cards in our customers’ wallets, we haven’t been as successful in getting them to pull them back out,” says John Rosenfeld, head of everyday banking. “If they’re not using it, they’re not getting value out of it and honestly neither are we.”
The new card’s annual percentage rate ranges from 12.99% to 20.99% depending in part on the applicant’s credit profile.
Cash-back programs are among the most beneficial credit-card rewards programs consumers can use. Many credit-card issuers also offer points or miles in exchange for dollars spent, but with those types of cards, the amount the points and miles are worth when they are redeemed can be reduced at any point in time. With cash-back programs, consumers are told what percentage of each dollar spent they get back and that dollar amount cannot be devalued, says Odysseas Papadimitriou, chief executive at CardHub.com.
Don’t Settle for 1% Cash Back on Credit Cards
ByAnnaMaria Andriotis
The credit-card rewards wars are heating up. A growing number of credit-card issuers are rolling out rewards programs that promise to give card users more cash back for their purchases.
The latest addition is Citizens Financial ’s newest credit card, announced on Wednesday, that offers cardholders 1.5% back on every purchase. The Cash Back Plus World MasterCard doesn’t cap the dollar amount that borrowers can get through this rewards program, and it allows them to get up to 1.8% cash back in total if they use the card at least once a month and arrange to have the rewards automatically deposited into a Citizens checking, savings or money-market account.
With cash-back rewards cards, card issuers pay a certain percentage of the dollar amount that cardholders spend with their card. On average that figure was just shy of 1% during the fourth quarter of 2014, according to credit-card comparison website CardHub.com.
But consumers will find a growing list of cards that offer more. Citigroup , for example, launched the Citi Double Cash card, which gives card users a total of 2% back, last August. Cardholders get 1% back on each purchase and another 1% back when they pay for it. Capital One Financial launched the Quicksilver card in 2013, which offers 1.5% cash back on every purchase.
Citizens Financial is a relatively small player in the credit-card market. It ranks 25th in U.S. credit-card purchase volume for 2014 among Visa and MasterCard issuers, with nearly $4.7 billion in card purchases made last year, according to The Nilson Report, a payments-industry newsletter. Citi and Capital One, in contrast, rank third and fourth respectively.
The three issuers’ recent rewards offerings don’t have certain restrictions often found with cash-back programs. Cardholders can earn the rewards on every type of purchase made using the cards, and there are no dollar caps on how much cardholders can earn in cash back.
In contrast, several cards offer rewards of up to 5% or 6% back but do so only for certain categories of businesses, like supermarkets or gas stations, or on a rotating group of retailers or category types. Those deals can make sense for consumers who spend a lot within such categories or at certain stores. But those who don’t often end up getting just 1% back.
The latest offers come as banks pay more attention to how their cards are being used. Citizens, for example, says its card will replace a credit card it previously offered that provided 5% cash back on certain categories only during the first 90 days after issuance. Rewards on all purchases then dropped to 1%.
The bank says it found that many of its existing customers were signing up for the card but weren’t using it much. “While we’ve done well getting [our] credit cards in our customers’ wallets, we haven’t been as successful in getting them to pull them back out,” says John Rosenfeld, head of everyday banking. “If they’re not using it, they’re not getting value out of it and honestly neither are we.”
The new card’s annual percentage rate ranges from 12.99% to 20.99% depending in part on the applicant’s credit profile.
Cash-back programs are among the most beneficial credit-card rewards programs consumers can use. Many credit-card issuers also offer points or miles in exchange for dollars spent, but with those types of cards, the amount the points and miles are worth when they are redeemed can be reduced at any point in time. With cash-back programs, consumers are told what percentage of each dollar spent they get back and that dollar amount cannot be devalued, says Odysseas Papadimitriou, chief executive at CardHub.com.
Mar 19, 2015, 8:43 pm
#3
Join Date: Dec 2014
Location: VA
Posts: 147
Cash-back programs are among the most beneficial credit-card rewards programs consumers can use. Many credit-card issuers also offer points or miles in exchange for dollars spent, but with those types of cards, the amount the points and miles are worth when they are redeemed can be reduced at any point in time. With cash-back programs, consumers are told what percentage of each dollar spent they get back and that dollar amount cannot be devalued, says Odysseas Papadimitriou, chief executive at CardHub.com.