Reward Cards Encourage Spending

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Reward Cards Encourage Spending

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Reward Cards Are Great – For The Lender

Reward cards are made out to be a great deal in the land of credit cards, but unless you frquently benefit from the potential rewards they really are not much use to you.

They are offered by the lenders to coax creditcard users into a false sense of security, or so it has been claimed many times.

Your credit score is the grown-up version of a GPA. The higher your scores, the better chances you have in negotiating in the financial world.

Your credit score affects your chance to obtain better financial options. One of the best ways to build positive credit history is by applying for credit cards. On the other hand, it is actually easier to apply for rewards credit card like the travel rewards credit card. Interestingly enough, the more you use these kinds of cards, the more you will save. Your credit score will rise considerably if these cards are used responsibly.

All credit cards are short-term loans. Hence, you should remember that when using reward cards, or any other card for that matter, you are borrowing money from corporate lenders. Remember that this financial transaction should be repaid full by the next billing cycle. Failure to pay dues on time may result in heftier fees. The current terms of your financial contract may also be void if you fail to honor your agreement and pay your dues on time.

Modern retailers and consumers realize that credit cards are an important cornerstone of the contemporary marketplace, especially for its use in daily life. For many individuals, it is normal practice to make use of reward cards to pay for goods and services of various kinds. Hence, the everyday nature of credit cards has made it necessary to select reward cards with additional benefits. Usually, the best features are found in reward cards such as the best travel credit card among others.

Reward credit cards are cards that offer a variety of benefits to customers in exchange for its use. In general, there are three types of reward credit cards: low interest, premium, no fee premium and rebate cards.

Low interest premium cards are suitable for individuals who carry a balance. Meanwhile the No Fee Premium Cards mostly waive the annual fee. In exchange for a no annual maintenance fee, they often increase the late fees. Citibank and Capital One offer no fee premium cars with considerable grace periods of around 23 days or so.

Always read the fine print on all no fee cards. In some cases, lenders will waive the annual fee for about 6 – 24 months before it is enacted while others enforce the annual fee when the consumer misses a payment or submits a payment that is late.

Rebate cards were the original reward cards. These cards offered rebates through gas credit cards for every dollar spent. These cards are generally no annual fee credit cards. Shell Card and Discover Card are some of the popular gas rebate cards.

Other rebate cards extend their consumer benefits. Some cards may offer discounts to popular travel agencies or airlines in exchange for the dollars you spent on the card. These cards are called travel rewards credit cards. Most of the reward cards work this way: the more you spend, the more rewards you get.

In general, the cardholder will acquire rewards based on the dollar amount of purchase on the particular credit card for the particular period. Rewards may be given in various forms such as travel sites and airfares, entertainment services and in selected shopping centers. Reward cards are costly to the lender so they increase the annual fees or fees applied to delinquent credit card accounts. However, it is still possible to find cards with no annual fees such as through internet sites and selected banks.

At the end of the day, reward cards such as travel rewards credit cards, gas cards etc., encourage customer consumption of goods, products and services. To boost your credit score, you will still need to use your card responsibly, regardless of whether it is a reward card or not.

How To Process Credit Cards

Processing credit cards is one requirement for anyone running a business.  It is a convenient mode of payment for customers when they make their purchases.  There are a few ways to process credit cards and choosing what best fits the demands of your business is just a matter of understanding how each method of processing credit cards work.

Here is an overview of the methods available for credit card processing:

    • Credit Card Terminal – A credit card terminal is a small, electronic terminal, wherein a customer’s credit card is swiped through an indented area in the box. The credit card terminal reads the code on the magnetic strip on the card which communicates it to the card’s bank through a modem to request for an authorization for the requested amount to be charged for purchases made. After the transaction, a receipt comes out of the machine with a confirmation code validating the transaction. Cards with a digitial chip, are entered into the terminal, and these are not swiped, but the payment process is pretty much the same as when a creditcard is swiped.

 

    • Automated Response Unit(ARU) is a method of credit card payment which allows customers to pay using the buttons on a touch tone telephone to key in credit card numbers and other codes to process credit card information. This method is a good alternative for business owners who do not want to invest in credit card terminals.

 

    • Payment Gateway – this is a method especially for online purchases and allows online retailers or merchants to access the customer’s credit card information through their website.  A customer has to fill out personal and credit card information on the merchant’s website. The information is processed and forwarded to the card’s issuing bank online.  The card’s issuing bank will then send an authorization code for validating the charge or a message that says the card has been declined.  All transactions made will be passing through this payment gateway.  Once the card has been charged, the goods or service will be delivered or given to the customer. The whole process only takes a few seconds.

 

    • Tiered-Level Purchasing Cards – are often used by corporations, businesses and government agencies for a faster transferring of funds and a means of paying their service providers and suppliers. It is a bit costly though to use this kind of method but a lot of time and  paperwork is saved by using purchasing cards is worth it. “P-Cards” are used by many companies because it allows them to make purchase orders in higher-volume. During the fiscal year, corporations and businesses make a lot of transactions with purchasing thousands and thousands of items and the “P-card” makes it a lot easier and convenient to make payments on time. The fees in transferring payments can be costly and one solution is for companies to use “level 2 or level 3 data” to lower the corresponding transaction fees.

 

    • Merchant Accounts – This is an agreement or arrangement between a financial institution or a bank and a business which agrees to receive credit card payments on the business’ behalf. To lower the risks in this kind of method, some banks give an amount limit and other restrictions. Merchant Accounts are marketed or offered by banks to businesses through agents sponsored by the banks called ISO or MSPs. These agents make the approval process easier and faster, especially for small businesses.  ISOs or MSPs can also provide additional services that may be vital to small businesses.

Now that several ways to process credit cards have been presented in this article, it is up to you to do your due diligence and decide which one is the most compatible method for you and your business needs. Acquaint yourself with the possible hidden fees and charges with each method.

Before I close this article I just want to add a few tips and comments about credit cards in the hope that they will stick with you while you are looking for your own shiny piece of plastic.

Here are a few pieces of advice:

Your First Credit Card
It isn’t until it is too late that many people realise that they should have done their credit card homework, before signing on the dott

ed line.

Credit Card Efficiency
Paying attention as to how and when you should use your credit cards can save you a lot of money and a lot of heart ache further down the road.

Credit Card Research
You should never accept just any credit card – no two credit cards are the same. If you don’t check things properly, you could regret it,

Reduce Credit Card Debt
It’s a fact of life that many people get into credit card debt, but there are ways that can help turn a bad situation around, if you know how.

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