Customer failing to collect rewards on credit cards
Many people in the UK that have credit cards decide to opt for some form of rewards based credit card in order to benefit from a range of rewards that can be accrued from simply using the card, such as reward points, discounts vouchers, air miles, and more.
These cards have proven popular because of the benefits offered, particularly amongst consumers that tend to repay their balance in full each month and therefore do not have to worry about interest charges.
However, despite consumers’ enthusiasm for this type of rewards based credit card recent research carried out by MoneyExpert.com has shown that many customers are failing to actually cash in on their rewards.
In fact, the research indicated that a whopping 83% of consumers have failed to collect over four billion pounds worth of rewards, such as air miles, gift vouchers, and loyalty points. The research showed that around 57% of consumers had accrued an average £42 worth of rewards points on their cards, and around 20% had air miles amounting to over £160.
An official from MoneyExpert stated: “It’s fairly typical for a company to offer customers an incentive to join their club. Whether it’s reward points in a supermarket or air miles for choosing a specific airline, loyalty is meant to pay. However our research shows that while these schemes are a clear incentive to buyers, we as customers do not fulfill our end of the bargain and spend our hard earned rewards. Which means providers have won twice by getting your business and then not having to reward your loyalty as agreed.”
He added: “If this shows anything it’s that there are very few reward schemes that genuinely work. Perhaps the best bet is to stick to a cashback credit card, where at least you are automatically rewarded in pounds and pence.”
0% interest on transfer and purchases with M&S
M&S Money is offering customers a tempting credit card deal, by offering six months worth of 0% interest on both balance transfers and purchases, enabling cardholders to enjoy the convenience, ease, and flexibility of the card without having to worry about paying any interest on the transferred or purchase balance. The 0% offer comes into play with immediate effect, according to a recent report.
The M&S credit card will offer six months worth of interest free credit on purchases from the date of account opening, and also six months worth of interest free credit on balances transferred within six months of the account being opened.
There is a 2% balance transfer fee that applies on the card, with a minimum fee of £5. In addition to enjoying interest free credit customers will also be able to earn M&S rewards points whenever they use the card, which can then be concerted to vouchers to spend in-store. The credit card has a typical standard variable rate of 18.9%.
M&S has also recently launched another offer for consumers that are looking for finance and meet the eligibility criteria. This is in the form of cash back on personal loans. The retail giant, which has branched out into financial services like many other retail giants over recent years, is offering a 25% cash back deal on personal loans that are taken out between April 1st and June 3rd.
Whilst the credit card deal is likely to prove popular amongst credit card users, consumers are also reminded that it is important to compare other credit card from a range of providers to check whether there is a more suitable or affordable deal on another credit card.
Credit card companies to rake in profits over Easter
With schools having broken up for the Easter holidays, many consumers in the UK could be heading off for a spring break to one of a variety of European destinations.
This is likely to be good news for credit card companies and banks, as they are set to rake in the cash from charges and foreign transactions fees resulting from consumers spending on their plastic whilst they are away.
According to a recent report card companies and banks could rake in around £180 million over the Easter period, and this is based on an average spend of £500 per person over the holiday.
Four million Brits are expected to go off on their breaks armed with their plastic cards over the Easter holiday, and industry experts have urged those looking to had off on a break to be aware and careful about the charges that they could incur through making transactions and withdrawals on their cards.
One industry expert stated: “A credit card with purchase protection of 90 or more days is the best option for purchases overseas. Not only do the credit cards from the Post Office, Nationwide and Saga offer this, but they also have zero per cent purchase offers of between three and six months and don’t levy foreign exchange fees in Europe. This is a far better prospect than their rivals that charge between 2.73 and 3.0 per cent.”
Another industry official added that hidden charges such as these could quickly result in extortionate costs for consumers, stating: “People who are planning to go abroad this Easter should be aware of the hidden charges that most card providers impose, which are both costly and unnecessary.”
Future financial difficulties for many credit card customers
As part of a nationwide cull many credit card companies have recently slashed the credit limits on the cards of many customers, reducing the limit to just £100 above the existing balance.
The card issuers did not inform customers of their intention to cut limits, stating that they did not want to give the customers the opportunity to go out and spend on the cards in order to increase their existing balance and therefore their credit limits.
It has now emerged that many of these customers could face future financial difficulties, as the reduction in credit limit could have an adverse effect on the consumer’s credit file.
Lenders look at how close to their credit limit card customers are when deciding whether to offer finance, and the way in which the credit limits have been cut means that affected customers will be extremely close to their credit limit until they repay their balance.
An official from a credit reference agency stated: ‘These changes will show on your credit report and could have implications. Lenders can assess this information any way they wish. If you are only a couple of pounds below your balance that could ring alarm bells.’
Another official said: ‘The credit limit cut does create an interesting conundrum. The credit scoring models don’t take into account limits cut by creditors to minimize their own risks. So a limit cut that leaves the debtor essentially maxed out can only protect the lender and harm the debtor. This seems grossly unfair since the debtor isn’t given ample warning or notice to clear the decks and instead is caught by surprise.’
Credit card customers warned about dangers of 0% balance transfer cards
During the first quarter of the year many consumers try and deal with the debts that they have accrued over the Christmas period by transferring their high interest credit card debts onto 0% balance transfer cards in order to avoid paying interest on their balance.
However, many end up paying over the odds simply because they fail to compare the different terms of these cards or decide to spend on the cards as well as transfer their balance.
Industry professionals are now urging consumers to make sure that they get the right card to transfer their balance, and that they avoid spending on the card.
There are a number of things that consumers should look at when looking for a 0% balance transfer card. Firstly, it is important to look at the interest free period offered, as the longer this period the more time you will have to repay the balance on your card without being charged any interest.
Another thing to look at is the transfer fee charged. With 0% balance transfer cards you are charged a fee that equates to a percentage of the amount that you are transferring, and this fee can vary from one provider to another, although it is typically between 2-3% of the total amount that has been transferred. It is important to check this so that you do not have to pay too much to transfer your balance.
It is also important for consumers not to spend on the card. Many 0% balance transfer credit cards offer a shorter 0% purchase period, but any balance accrued from purchases gets trapped behind the transferred balanced, and all repayments are applied to the transferred balance leaving the purchase balance to accrue interest.
One industry official stated: ‘The main message for borrowers transferring a balance is always to read the small print and check out the way interest will be charged if you intend to spend on the card. Some cards offer a 0% deal for balance transfers and new purchases - but the majority impose different rates on the transferred balance and new spending. If borrowers know they need to keep using a credit card, it may be preferable to have two cards - one to clear a balance and the other for new spending.’