Before we move on to the rewards cards, it’s important to explain the purpose of credit cards. These cards play two important roles for both the provider and the cardholder involved with the facility. The dual-purpose exists for the sake of both the lender and the user. (See Credit Card Basics You Should Know)
The lender is usually the bank. Banks issue credit cards as they benefit from such action by charging the APR on the account. All costs of lending money through the credit card facility are described as the annual percentage return or APR.
Every time a card owner swipes their card at a merchant or retailer, the lender or bank makes a fee for the service from the merchant. The service fee goes up to 4% of the sale. Every merchant is required to pay the service charge costs, as these costs are the percentage from the proceeds of the sale.
By doing so, the merchants are allowed to compete in a competitive marketplace for any business. On the other hand, the cardholder gets a chance to choose to shop with other retailers.
Put simply, a cardholder takes a loan to make a purchase, and the lender or the bank charges them APR interest on the amount they loaned, so that both parties involved are satisfied.
The lender or the bank makes money from the APR while the cardholders get the privilege of making the wanted purchase. Credit card APR ranges from 16 to 25% and sometimes goes even higher. It depends on an applicant to an applicant as not every person has the same credit score at the time of their application.
People with good credit scores can apply for the best interest rates, while users with low credit scores receive the highest rates. Each cardholder is required to make monthly payments to the card provider. These payments include interest on the outstanding funds.
The interest is set by the APR on the credit card facility the cardholder selected. The lenders, banks, and providers make profits off of pocketing the interest charges to keep shareholders happy and increase their bottom line.
As a card user, you enjoy the benefit of not having to pay for a product you’ve bought right away. A credit card allows you to buy now and pay later. That benefit costs you the bank APR interest on your current outstanding balance.
Because of that, many people are interested in credit cards as they allow them to make purchases that they wouldn’t be able to afford. The credit facility allows you to extend your purchasing power.
Credit Card Rewards Programs
When looking at the credit card market from the lender’s perspective, we can safely say that it’s quite a competitive landscape. There are thousands of credit card lenders, all competing to attract more users to their products.
(a)The APR is probably the first thing people will look into before they decide to apply for any credit card facility. Your credit score is what sets the APR rate, and most card providers charge the same rate. Aside from this primary factor, (b) the second one is the rewards program.
It’s how lenders gain a competitive advantage that helps them secure their business. The rewards programs are attached to credit card facilities, and the cardholders initiate these programs by using their cards. These programs are like promotions with the main purpose set at attracting new card users.
They come in a wide variety of formats. They can be pretty much anything, from discounts on vacation packages, hotel fees, and car rentals to frequent flyer miles. They can also include cashback rewards. Most lenders provide a points system with authorized retailers where cardholders can buy at lower or discounted prices.
Match your rewards program with your lifestyle
Having a great credit card with a good and beneficial rewards program can change your entire lifestyle for the better. Think about your business and your life. If you’re jet-setting business person, you probably travel a lot, which involves a car and hotel rental fees, flight costs, and additional charges.
Saving money on all your purchases is an excellent way to build up your credit score and make the most out of your budget. That’s why you need a credit card with an excellent rewards program that allows you to manage all your expenses efficiently.
The best thing about credit card rewards programs is that most card providers are fully aware of the diverse needs that their users have. That’s why most of them institute rewards programs that can be tailored to better suit specific financial needs and lifestyle requirements of each cardholder.
For example, if your lifestyle includes taking frequent flights, applying for a credit card with a frequent flyer miles rewards program seems like the best thing to do. However, if you haven’t been on a plane for a couple of years, having a card with such a reward program is pretty much useless to you.
You should always look for an option that completely benefits your current financial position. If saving money on your monthly shopping is your financial goal, look for a rewards program with those kinds of benefits.
The whole point of having a credit card is to upgrade the standard of living and make better financial choices that will improve your financial situation and well-being.
Always ask for the rewards programs available with your lender before you apply for a credit card facility of your choosing. Your rewards structure must match your lifestyle and financial requirements. That way, you can leverage your budget to enhance the quality of life.