Harvesting Rewards
Credit card firms are dangling the carrots in an effort to win over loyal users
Bank cards are also aimed at disgruntled frequent-flier members who face increasing restrictions and blackout dates when using their mileage. The biggest disadvantage of these cards is that you cannot combine the miles you earn by swiping your card with any traditional frequent-flier programs, but some cards are starting to compensate for that inconvenience. The Citi PremierPass, which made its debut last year, not only gives cardholders a point for every dollar spent but 1 point for every 3 miles flown on a plane. That's all for no annual fee; pay $75 for a more expensive version of the card and get 1 point for every mile flown and 2 points for every dollar spent at supermarkets, drugstores, and participating merchants.
Whatever card you pick, just remember that issuers can change the terms of a card or cancel the program altogether, leaving you with worthless points or in a different program altogether. Take the Barnes & Noble MasterCard Rewards Program, which was discontinued this April. Cardholders retained the points they earned on the card but were switched to MBNA's WorldPoints program instead. So plan accordingly. "Don't think long term when you are doing these programs," says McKinley. "Think in terms of a year or less." After all, nothing lasts forever.
ARE REWARD CARDS FOR YOU?
Do you carry a month-to-month balance?
YES - Standard Cards. Try looking for a credit card that might have a more attractive interest rate than reward cards.
NO - Do you travel a lot?
YES - Do you belong to a specific frequent-flier program?
YES - Travel rewards. Look for an airline-affiliated card, like United Airlines Mileage Plus Visa from Chase or Delta SkyMiles from American Express.
NO - Look for a card that will let you travel with any number of airlines, like Citibank's PremierPass.
Are you a brand-loyal consumer?
YES - Merchandise rewards. Look for a card tailored to fit your specific interests and buying habits. If you shop at a particular store or dine at a certain restaurant, check to see if there is an affiliate card.
NO - Are you a heavy spender?
YES - Cash-back rewards. If travel or merchandise rewards aren't appealing, cash-back programs are a third option. Look for a tiered rebate card, like American Express's Blue Cash Card.
NO - Look for a flat-rate rebate card, like Citibank's Dividend Platinum Select.
NOW YOU'VE GOT A CARD
Be aware of any limitations with the rewards program, like expiring points or minimum balances.
Watch out for sudden changes in your rewards program rules or the card fees.
Always scan the horizon for a better deal.
Graphic by Danny Dougherty-- USN&WR
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