With all the
furor over debit card fees
, you'd think that banks had absolutely nothing to offer any of
their customers. But in stark contrast to the debit card
environment, banks are loosening the purse-strings on credit card
offers -- and if you're smart, you can take full advantage and
cash in while the money lasts.
What the Street taketh away, the Street also giveth
Millions of taxpayers and bank customers alike are furious at
Wall Street banks for
imposing fees on what have become basic banking
Bank of America
) among banks looking at monthly charges for debit card use, it's
apparent that big banks are trying to make up for the loss of
revenue that new regulations have imposed on them. Other banks,
) , have ended rewards programs on debit cards, while even free
checking is at risk of nickel-and-dime fees.
But at the same time that big banks are trying to milk debit
cards for every penny they can get, they're paying some amazing
rewards to try to convince people to get new credit cards.
Consider some of the most recent deals:
) is offering a preferred version of its Sapphire card. If you
spend $3,000 during the first three months you have the card,
you get 50,000 reward points -- which are worth a whopping $625
if you use them for travel, or $500 as cash.
- Earlier this year,
) did a promotion to match up to 100,000 airline miles in new
cardholders' frequent-flier accounts. Deals to receive 50,000
to 75,000 miles on various programs have become almost
(AXP) offers its Blue Cash card with a relatively modest $100
signing bonus, but it offers an unlimited 6% rebate on
Most of these cards charge
, but they usually come with fee waivers for the first year. That
makes them no-brainers to try out -- and if the deals end up
being worth the annual fee, then you can keep the card at renewal
Why is this happening?
Banks have always understood that credit cards were potentially a
far more lucrative product than debit cards. With debit cards,
fee revenue from merchants was the primary source of income, and
with that drying up because of new fee limits, the niche doesn't
have the profit potential it used to have. Part of the reason
(Nasdaq: GDOT) have better prospects is that the new debit-card
regulations don't apply to prepaid cards -- at least for now.
By contrast, credit cards earn banks revenue from both ends of
a transaction. Not only do they reap interchange fees from
merchants, but they also get to charge the often sky-high finance
charges they collect from cardholders. And with delinquency rates
having come down over the past year, the risks to banks from
credit cards have fallen.
From a customer standpoint, though, credit card rewards are
your opportunity to cash in on the banks without falling for
their sales pitch. Rewards encourage people to spend more,
getting less-disciplined cardholders to get in over their heads
and start having to pay monthly finance charges. But if you make
sure you pay off your balance every month, you can take advantage
of those rewards without paying the price for them further down
The time is now
Many people complain that banks charge fees for things they
should provide for free. Credit card rewards are a way to turn
the tables on that troubling trend by grabbing free money while
the getting's good. In the ongoing battle between Wall Street and
the common citizen, the credit card battlefield is one place
where financially savvy customers can win.
The funniest part of the new credit card wars is that credit
cards themselves may soon be practically worthless. Read this
Fool special report on how new technology will make cards a thing
of the past.
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