Make your credit cards sweat whilst you can
Make your credit cards sweat whilst you can
If you're one of the 30% of people who pay off your credit card balance in full just before the due date, and you're careful to avoid cards with an annual fee, I bet you compare credit cards every month and think you've got one up on the credit card companies! There's nothing wrong with that, getting the convenience and payment protection of a credit card, but not paying the card issuer anything in return!
How about taking it one stage further, and getting your credit card company to pay YOU for using your credit card. Sounds fanciful, but it's very possible. Its all down to credit card comparison, and seeing which card or deal fits you and your life best.
If your discipline, lifestyle and financial profile enable you to reliably settle your credit card balance every month, you could really benefit from either a cash back credit card which literally pays you cash back for every pound you spend, or even a rewards credit card which helps you to build points which can be redeemed for free travel, holidays or other goods.
The recently revamped NatWest Black Credit Card offers a generous 1.25 NatWest YourPoints for every pound spent on the card as well as Airport Lounge Access, a comprehensive insurance package and a Concierge Service.
We should consider taking advantage of these kinds of deals whilst they're around, there are rumblings afoot across the Atlantic. It's sad but frequently true that we often have to look stateside for a heads up on trends in the world of financial products.
There's some significant change occurring in the credit card industry in America. The US Government is suing prestige credit card provider American Express with claims of anti-competitive practices. The Government also sued credit card giants MasterCard and Visa, but both firms agreed to settle their cases. American Express vowed to fight the charges.
When they sign up with a major credit card provider, retailers must pay fees charged by that provider. But the credit card company's merchant services contracts also prevent the retailer from offering customers the chance to pay with rival credit cards that could be cheaper.
At a recent Justice Department press conference the US Government announced that the terms and conditions of the major credit card companies were restricting competition by preventing merchants and retailers from offering customers alternative forms of payment.
US Attorney General Eric Holder said
"Visa, MasterCard and American Express don't just impose fees, they also prevent merchants from offering consumers any cost-saving options such as discounts or rewards for using less expensive forms of payment".
"The companies put merchants and consumers in a no-win situation: accept our card, pay our fees, and don't even think about trying to get a discount."
In agreeing settlement terms with the Government, MasterCard and Visa agreed not to prevent merchants from offerings discounts on rival's credit cards.
American Express however stood their ground and maintained that their merchant contracts weren't anti-competitive.
American Express Chief Executive Kenneth Chenault said
"We have no intention of settling the case.
"We will defend the rights of our card members at the point of sale, and our own ability to negotiate freely with merchants".
With the contraction in credit card spending resulting from the credit crunch, the credit card companies are clearly fighting hard to maintain their revenue streams. A number of credit card companies particularly those with basic products are starting to make an annual charge to customers who clear their balances on time every month. They simply can't afford to maintain the services without making money.
It's clear that as well as changing the shape of their products and underwriting criteria to weed out unprofitable customers, the credit card companies are also looking at all avenues to reduce risk, and boost their earnings per customer. Recent surveys all seem to indicate that the deal for the customer is slowing deteriorating with rewards programs and credit limits being cut, and fees minimum payments increasing.
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