Personal Finance

Rate survey: Credit card rates slip on rewards card adjustment

Wells Fargo pared down the low end of the APR range offered for its Cash Back and Rewards cards, sending the national APR average downward. Both cards had carried an APR range of 12.15 percent to 22.15 percent. The new range is now 11.15 percent to 23.15 percent.

"We regularly review our pricing and take into account the needs of our customers, industry trends, market conditions, and our cost of doing business," Wells Fargo spokeswoman Lisa Westermann said. "Our intent is to continue to provide credit to as many customers as possible."

Rewards cards deals are ubiquitous; eight of 10 offers have a reward tied in. Nearly all Wells Fargo's offers include a reward, most of which are point-based, said Lisa Hronek, spokeswoman for Mintel, a market research firm.

"Rewards cards are very popular with our customers," Westermann said. "Customers expect to be rewarded for their business and their loyalty; we offer rewards as a way to further demonstrate our appreciation for that loyalty."

Though rewards programs can be alluring, it is important for customers to educate themselves on the pros and cons of rewards programs and rewards management. Credit card rewards can be profitable for both consumers and banks -- for the former if they use the rewards, for the latter if consumers don't.

Typically, these programs entice cardholders to charge more because they want to accumulate more points and use them, but often those rewards points go unredeemed, according to Colloquy, a loyalty industry research organization. About one-third of the $48 billion in rewards issued in the U.S. go unclaimed each year. That's $16 billion in rewards that consumers earned but card issuers don't have to pay out.

There are various types of rewards offered; the leaders are cash back and airline rewards. One important thing to be aware of are annual fees -- they can easily cut into the yield of rewards, making them a poor value for consumers, especially those already mired in debt. According to, the rewards cards most notorious for annual fees attached are airline and hotel credit cards -- most other rewards programs charge no annual fee.

After the Credit CARD Act of 2009, some experts projected card issuers would scale back rewards programs. However, rewards incentives are just as widespread as ever -- card issuers did begin ramping up marketing to high-end spenders who pay their bills on time every month. There was, however, a decline in rewards programs tied to debit cards. In the wake of the CARD Act and the recession, banks are still developing strategies for rewards programs to see what works and what doesn't.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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