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In
1950, the first
credit card
that could be used at more than one, specific
merchant emerged on the market. The Diner’s Card,
started by Frank McNamara, was an invention that
got its start when Frank was having a business
meeting over dinner, and realized he had forgotten
his wallet at home. Of course, the man was
extremely embarrassed, and had to call his wife
and ask her to bring him his wallet so he could
pay for the bill. Then the light bulb over his
head turned on, and he thought it would be
incredible to have a way to purchase things
wherever people shopped, and pay for them later.
The Diner’s Card started with 200 card holders,
and within a few years- banks and private
companies began offering credit cards.
Eventually there were so many credit cards to
choose from that the credit lenders had to come up
with new ways to stand out from the competition
and entice people to select their card over
another. Credit card reward programs were born
sometime around 1986. Discover
card began offering cash back
based on the amount of money you spent on your
credit card, and the first “frequent flier miles”
for credit card
users was with Continental Airlines. The frequent
flier miles were such a hit that now every airline
has joined in the rewards programs,
offering discounted trips, free complimentary
airfare, travel accident insurance- all based on
the amount of spending you do using your credit
card.
Now that just about every credit card has some
sort of rewards program
in place, once again card companies are finding
themselves looking for new ways to entice more
customers to slide their credit card into their
already overflowing card holders in their
wallets. Rewards programs have to be turned up a
notch, and become so amazing, so absolutely
unforgettable that consumers can’t forget them and
will apply for and use their card more than the
other seven in their wallets when they go
shopping!
Currently, the trend in credit card rewards programs
appears to be creating cards that offer very
specific rewards to cater to what people are doing
with their lives. Michelle Shepherd, of MBNA Corp
(one of the largest credit card lenders) says the
rewards programs are developed with real people in
mind, offering something for everyone “…whatever
stage in life a person is in, whether it’s someone
who’s trying to reduce a mortgage or someone
dreaming of going to the Super Bowl”. This is
seen in credit cards MBNA offers with rewards
programs related to NASCAR and GMAC. Also, Visa
offers several credit cards
with Disney rewards programs- your spending earns
you points towards travel to Disney theme parks
and on the Disney cruise line.
Credit card interest rates
have begun to rise overall, which is another
reason why lenders are trying to entice new
customers with their fabulous rewards programs.
It would be hard for a card to sell itself to new
customers with a high, unattractive interest rate-
so lenders have learned to sell the idea of the
rewards programs, hoping to gain your interest
from that and divert your attention from the
not-so-glamorous interest rates.
Keep in mind that while rewards programs can seem
very rewarding when you are considering a credit
card offer, there is often a lot of information
you won’t find out until after you apply for and
receive the card. Rewards programs often have
limitations, meaning once you reach the ceiling
you are no longer eligible for the rewards program
benefits- information they don’t normally disclose
in the credit card offers you receive in the
mail. Also, for rewards programs that allow you
to purchase items with points earned based on the
spending you do using your credit card, keep in
mind you will probably be charged additional money
for shipping and handling of those items. For
cards that offer travel discounts and airline
tickets, many rewards programs require you to then
pay transaction fees to redeem them.
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