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Netrate Concepts-"Cost of Travel Card Rewards


By Guest
Posts: 27

Posted on: January 16, 2013 at 10:57AM

After tinkering with their credit-card rewards programs for the past few years, banks are now placing renewed attention on travel cards. In their latest promotions, banks are offering more introductory points or miles to consumers who sign up for the cards and spend a set amount in the first few weeks. Next month, U.S. Bank will raise the initial bonus points on its FlexPerks Travel Rewards Visa Signature card—its second increase in the last year. In November, J.P. Morgan Chase doubled the bonus miles on its British Airways Visa Signature card. Other card issuers, including Citi and Bank of America, are also offering introductory rewards in exchange for swiping their credit cards. For cardholders, there’s a catch: in many cases to get the rewards, they’ll need to spend more than in the past. This month, for instance, the Pentagon Federal Credit Union began requiring cardholders to spend $2,500 in their first three months with its Premium Travel Rewards American Express card in order to get 20,000 bonus points; cardholders who signed up for the card prior to January only need to spend $650 to get the same number of points. Separately, U.S. Bank’s upcoming offer of 20,000 bonus points requires spending $3,500 in the first four months with the card, up from $2,500 in the first five months for 17,500 points. The additional 50,000 miles that are up for grabs with Chase’s card require spending $20,000 within the first year. For those consumers who plan to spend those higher amounts, the cards can be a decent value. But for many others, the latest offers might not be worth it, say experts. The rewards typically aren’t worth it for those who carry a balance since the interest charges they’ll incur—ranging from roughly 10% to 24%—will likely wipe out what they earn in points or miles. Also, the incentives could lure cardholders into swiping for more than they otherwise would, says Curtis Arnold, founder of CardRatings.com ( CardRatings.com ), which tracks credit card deals. Click to Play Travel apps for the new year WSJ Middle Seat columnist Scott McCartney joins Lunch Break to evaluate the most useful apps when you're away from home. Consumers looking to rack up points might want to consider credit cards that don’t have a minimum spending threshold. In November, Bank of America increased the initial rewards on its Norwegian Cruise Line and Hawaiian Airlines Business cards from 10,000 to 15,000 and 35,000, respectively, which it doles out after the cardholder’s first purchase—no matter the dollar amount. Experts say the moves are partly a response to recent regulation. The Durbin amendment, which went into effect in October 2011 and is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, lowered the fees banks receive from merchants when consumers swipe their debit cards, but didn’t impact the fees for using credit cards. In response, many banks cut back on debit rewards while making credit cards more attractive by comparison. Some banks say they’re also hoping to lure in more affluent card users, who tend to use travel rewards more than other card holders. U.S. Bank can pitch other services to them after they become credit card customers, says Bob Daly, senior vice president of retail payment solutions at the bank. That includes wealth-management services, mortgages and deposit accounts, he says. Wealth management, in particular, is seen by many banks as a way to replace revenue that has been lost due to new regulations. Consumers considering one of the introductory rewards offers should review the credit card’s terms before signing up. Find out if the card charges an annual fee—which can range from about $50 to $100—and whether its rewards program is generous enough to outweigh that costs. report a problem

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