Thursday, February 19, 2009

Credit Card Rewards Are Falling Fast!

As the economy continues to deteriorate credit card companies are reducing rewards as a way to lower expenses. The typical leaders in credit card rewards cards such as Chase have introduced new programs that are just not as lucrative. New Chase card members can only receive 3% bonus cash back on gas, groceries, and fast food purchases for the first 6 months. They really provide no incentive for users to stick with the card for a time period longer than six months.

There are less incentives to sign up for new cards. In fact many companies have really scaled back on their marketing budgets as a way to preserve capital. New customers are now consider a liability.

Companies are also lowering available lines of credit. American Expression has been known to monitor user’s spending habits via credit card transitions and try to see if the user has changed their behavior which might indicate future problems with the subscriber’s ability to pay off debt. For example, if they noticed that a shopper used to shop at Nordstrom’s is now at Wal-Mart, they might reduce the credit line. While this may not sound very fair it is something that can happen so watch out!

The best advice right now is to use credit wisely and try to limit credit card debt.

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