• Credit Card Points – Boon or Bane

    Credit cards today, are one of the most indispensable financial products available . It is nothing but a piece of plastic issued by banks through which customers can procure the items of their choice on a credit basis. This is especially advantageous for those customers who wish to purchase items that they cannot pay for on an immediate basis and they can pay for the same at a later date. Customers also avail a lot of offers from banks when procuring a credit card. One of the most popular perks offered are credit card points.

    What are credit card points?

    Reward points or credit card points were first set up as a marketing gimmick to entice customers into procuring credit cards. Loyalty points are also based on a similar premise,i,e., the more customers utilize their card for transactions, the more points they can procure and thus can receive more rewards and offers. These points, once accumulated, can be exchanged for a host of rewards or perks or even cash. Also, these points are stored in their cards electronically hence there is no need for customers to procure additional cards or anything just to store the information.

    Based on the target, the number of points that can be accumulated can be decided. There are credit cards that are based on certain requirements such as fuel or vehicle or those targeted towards female customers; these cards generally come with reward points that can be used specifically for those purposes. For example, a credit card that shares its brand with, say, a pharmaceutical company will offer points that can be exchanged for medicines at that particular company at a discount.

    These rewards can be beneficial for the customer and worth their money and effort and there is no major issue that comes out of this. However, customers must ensure that they do not utilize their credit cards just for the purpose of earning these reward points because that is when these points can be detrimental to their finances.

    The negatives of credit card points

    Too much of a good thing can actually be bad. This is also the case with credit card points. When customers start utilizing their credit card for the sole purpose of earning points without understanding the basics of it, their financial health will take a hit.

    One of the prime issues is faced by customers regarding the above, is when they give more importance to reward points than mindful spending of their money. Customers have to understand that credit cards are to be used to manage finances in a better way and also in an organized fashion. Credit card points should not be the goal, rather, credit card points must just be another feature offered by the credit card providers. In order to procure more credit card points, customers tend to spend a lot more than usual which is, of course, harmful for them financially.

    Another thing that Filipinos must avoid while procuring credit card points, is to avail a card for the sole purpose of reward points. Certain credit cards may offer more scope for accumulation of credit card points rather than the one that is most suited to their needs and requirements. One of the biggest factors that entices customers to procure a certain credit card is the amount of interest offered by it, however, in the quest for credit card points, customers tend to overlook the interest rate and other pertinent factors such as annual fees and other charges.

    The above two points are highly detrimental to a customer’s financials and can have a serious impact on debt accumulation which occurs when customers are unable to pay their credit card fee. Credit card points are good but other factors must also be kept in mind.

    How can customers make use of the credit card points program ?

    Credit card points, when utilized wisely and carefully can be beneficial for the customer as it can be exchanged for a number of rewards and products and sometimes also for cash. These rewards can range from travel perks to dining discounts to retail offers. Some of the tips given below is useful for customers who want to utilize their points to the maximum.

    • Research and comparison are going to be two of customer’s best buddies. Almost every credit card offered today comes with a set of reward points and other offers but the first one that is seen is usually not the most suited. Therefore, customers must look around, compare the different types of credit card points against the benefits they offer and its suitability to the customer’s financial status. Pointers that customers have to give importance to are rates of interest, annual fees and so on.
    • The duration of the credit card points is another factor that must be kept in mind. Certain points are applicable throughout the usage of the customer’s credit card. However, some pertain only to certain periods of time or festivals and such. Therefore, all points are not applicable all the time and customers need to ensure that they are aware of this.
    • Weigh the credit card points offered against the benefits of the card if customers possess multiple cards. This is the easiest thing to do, because if customers have many cards then they should discard the one with the least amount of points and benefits offered.

    Credit card points are highly beneficial to customers when they know how to utilize them in the best possible way, however focusing only on these points can result in negative financial health for the customer. All credit card points are enticing, but although some promise rich rewards, they are not necessary at all and in fact are just problems presented in a nicely wrapped package. The first priority of customers should be the benefits of the credit card and the rates of interest and not just the reward points.

    Keeping these points in mind, customers within the Philippines can ensure the best of both credit card points and other perks offered with it.

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