Why Smartphones will kill Credit Card Rewards

Discussion in 'Travel Technology' started by sobore, Nov 6, 2013.  |  Print Topic

  1. sobore
    Original Member

    sobore Gold Member

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    http://www.finextra.com/Community/FullBlog.aspx?blogid=8445


    Credit cards are expensive. According to BankRate.com the average US annual percentage rate (APR) charges on credit cards is 15.35%, but that’s down in recent years. During the financial crisis some US-based credit card APRs went as high as 39.6% as banks like Bank of American tried to compensate for increasing risk, or unwind high-risk credit that was being carried by the bank. In the UK credit card rates hit a 13-year high in 2011, averaging out at 18.9% annually.

    In some cases customers who had maintained a good credit rating, but were otherwise in the marginal zone of profitability, were targeted for perceived risk (re-adjusted due to the financial crisis) – this prompted some customers to creatively respond to these rate increases with very public rants against the banks involved.

    The core problem with credit cards today for consumers is that they are fundamentally designed to encourage spending, in order to generate revenue for card companies and issuing banks. While debit cards are marginally better for consumers on an interest rate perspective, the lack of visibility on spend and overdraft fees means that in the US the average consumer pays $225.00 in fees per year on a debit card/checking account – that includes all those “free” checking accounts, which are anything but!

    Read More: http://www.finextra.com/Community/FullBlog.aspx?blogid=8445
     
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  2. ChrisUNC

    ChrisUNC Silver Member

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    I fail to understand the link between smartphones and the death of CC rewards - the Starbucks example is a pretty far stretch, at least for the near future.
     
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  3. Tenmoc
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    Tenmoc Gold Member

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    Closest thing I can see is with more information the spend spend spend days are over.

    But everyone here knows, if you carry a balance your rewards card is a waste.
     
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  4. Newscience

    Newscience Gold Member

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    Hmm, I also suspect that the average person who "churns" credit cards with any degree of success also incurs credit card fees of greater than the $225 per year quoted above! But, as Tenmoc noted, you need to not keep a balance on your credit cards, or else whatever "miles", "refunds" or "freebies" that you think that you are receiving from the credit card company/airline, etc. are anything but "free" - you're paying for them! :(
     
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  5. aussiwi

    aussiwi New Member

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    Have you guys seen what www.mogl.com is doing with loyalty and credit cards - can earn a heap more miles on Virgin & Hawaiian at the moment only in California. Don't think credit cards are going away - at the end of the day all these smart phone apps connect through a credit card.
     
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  6. moongoddess

    moongoddess Silver Member

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    Smartphones won't kill credit card rewards because too many people are too math-challenged to figure out exactly what their "free" rewards are really costing them when taking into account the interest rate they're paying on their running balance as well as the annual card fee.
     
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