You are exposed to countless credit card ads on TV and other media, but did you notice anything unusual about them? You do not hear much about rates, unless they are 0% introductory rates. You do, however, hear quite a bit about rewards programs. Credit card issuers are battling for market share based on increasing rewards, to the benefit of consumers — assuming consumers are savvy about their choices and investigate the tradeoffs that exist to make up for those rewards programs.
A recently published report by CardHub shows that average third-quarter credit card rewards are up across the board compared to the same period in 2014. Cash-back rewards increased by 2.04%, and miles/points rewards increased by 1.74%.
Credit card companies are not going to offer anything that does not make money for them in the long run, so it is important to look at the other terms and conditions and whether they fit well with your typical credit card use. For example, if you pay your credit card off regularly and never charge more than you can pay off monthly, you could care less what the interest rate is.
Don't forget to compare all the fee structures that may apply over and above the annual fee. For example, cash advance fees are a common counterbalance used by credit card companies.
Since the beginning of 2011, fees for cash advances have increased by around 60% with the average being the greater of 3.98% or $14.11 depending on the size of the withdrawal (although that represents a slight drop from the previous quarter). Annual fees are also on the rise, with an average increase of over 5% as compared to 2014, and average maximum late fees have increased over 4% to $35.61.
Balance transfer cards, or cards with introductory rates that are designed to consolidate debts or buy time to pay down large balances, are another battleground for issuers. Balance transfer cards may have different rates or times for new purchases as compared to transferred debts. Over the past year, the 0% balance transfer period increased by 3.7% while 0% periods on new purchases shortened by over 3.2%.
CardHub suggests that the above data means that issuers are competing more vigorously for consumers' existing debt while providing a disincentive to accumulate more debt. A more cynical view would suggest that card issuers are slowly shortening the 0% time on new purchases in order to recoup some of the revenue lost in offering increased rewards packages. Regardless of the credit card issuer's motivation, this means that a savvy consumer can take advantage of rewards programs that best fit their usage patterns.
The top complaint of credit card holders is billing issues, which consistently take up around 20% of the total complaints. For the third quarter, billing complaints took up just short of 23% of the total. Identity theft, fraud, and embezzlement issues came in second at almost 10.4%.
The CardHub report also compiled complaints by major issuers in order to create a satisfaction rating. Of the seventeen card issuers listed, the Navy Federal Credit Union had the highest customer satisfaction rating of 95 on a 100-point scale. The poorest performer was Synchrony with a satisfaction rating of 75%.
The takeaway message from the CardHub report is that shopping for the best credit card rewards programs can pay off, as long as you take the time to investigate properly the fees and satisfaction ratings. Don't just assume that you already have the best deal.
If you want more credit, check out MoneyTips’ list of credit card offers.