One reward card after another is rolling off the line for consumers. There’s an Uber Visa, a Starbucks Rewards Visa, and now what Fiat Chrysler hopes will be its muscle card.
And don’t forget, we’ve got credit cards that can rack up points for buying gas at the pump, too.
Everywhere you turn, you can find a card offering rewards. But the reality is that it can be extremely tough to get consumers to change their habits and dedicate the bulk of their spending to a new go-to card.
Nearly 30% of American credit card holders have never switched their primary credit card, according to a survey by CreditCards.com. If representative, that would translate into 49 million Americans.
Another 12% of consumers said they last changed their go-to credit card 10 years or more ago.
Frankly, too many choices for different rewards platforms leave some consumers frozen in their plastic tracks.
At the same time, though, many consumers love to talk about how to find the next, great credit card that can easily build up rewards points. So, that’s why we see all those tempting new rewards cards.
The Uber Visa, issued by Barclays and launched last fall, targets millennials by offering 4% in rewards points for eating out; 3% on airfare, hotels and vacation home rentals; 2% for online purchases and 1% on everything else. Earn $100 after spending $500 on purchases in the first 90 days. No annual fee.
The Capital One Savor card focuses on consumers who like to eat out, too. It offers unlimited 3% cash back on dining, 2% on groceries and 1% on everything, as well as a $150 cash bonus when you spend $500 in the first three months from opening the account. No annual fee.
The Starbucks Rewards Visa Card, introduced in February, charges a steep $49 annual fee. In order to make the points system work for you, you’d have to be a huge Starbucks fan. Your rewards are “stars” that can be used at Starbucks and there are periodic, special Barista picks, complimentary food or beverages. You can get up to three stars for every $1 spent at Starbucks and you get one star for every $4 spent outside of Starbucks. The stars expire six months after they are awarded.
The FCA DrivePlus Mastercard is engineered to offer extra reward points to customers who want to buy a new Jeep, Ram or other FCA vehicle and go to the dealership to get oil changes, fix the brakes or take care of other maintenance.
Consumers have been hearing about the new FCA DrivePlus Mastercard at dealerships, via social media, some automotive newsletters and online at www.DrivePluscard.com.
Fiat Chrysler is trying to stand out from the crowd by doubling rewards if you use those points at dealerships in the FCA network. But you do need to make sure that your dealership is participating in the program. Rewards expire seven years after they are awarded.
Figuring out how to earn the most perks can be exceedingly complex with some cards, as points earned can vary by purchases.
Naturally, if you’re opting for a credit card with rewards points tied to a car company, you’d want to be a loyal buyer of that brand.
The GM BuyPower card, offered through Capital One, builds rewards that can be exclusively used toward a new Chevrolet, Buick, GMC or Cadillac vehicle. Cardholders earn 5% on the first $5,000 in purchases in a year and then 2% after that. Earnings don’t expire on an open account.
The GM Extended Family Card is geared toward building rewards for GM employees or GM suppliers. But again, those points are used toward a GM car or truck purchase. Cardholders earn 1% on purchases. Earnings are good for seven years.
In the case of the FCA DrivePlus card, you’d want to handle repairs or maintenance at FCA dealerships to make the double-the-rewards structure work for you.
For example, a consumer who spends $1,000 at the dealer on the card, gets $50 in points. But those points can double to $100 if used for an in-dealer purchase.
All of your earned rewards are worth double value when redeemed at your FCA US dealership good toward the purchase of your next FCA vehicle, new tires, maintenance, even oil changes. Make sure your dealer is participating.
If not used at a dealership, points can be used toward statement credit or a variety of gift cards. But you’re not doubling your rewards in those cases.
The FCA DriverPlus Mastercard, issued through First National Bank of Omaha, initially had been offered on a limited basis at several dealerships. The automaker officially launched the card earlier this month.
It has no annual fee and the plastic can be customized with different artwork, including specific models such as the Jeep Wrangler and the Dodge Demon.
By opening the DrivePlus card, consumers receive a $100 credit on their statements with the first purchase made at the dealership, too. And that extra $100 could offer some help covering car maintenance.
Another perk: A 0% financing offer is available for some car owners. The 0% rate is good for six months on a purchase at the dealership for $499 or more.
After the 0%, a card holder would face a variable rate of 15.24% to 26.24% depending your credit history. The rate is based on the prime rate and would go up if the prime goes up in the future.
“There’s so many people living check to check,” said Ralph Mahalak Jr., an owner of Monroe Dodge Chrysler Jeep Ram Superstore.
Someone who might be looking at a bigger maintenance job, such as brakes, could be more willing to take on that expense, if they can get 0% for six months.
Mahalak said some customers might even want to buy a package of oil changes for the year if they open the card and immediately get a $100 credit.
For each dollar spent at a Jeep, Ram, Chrysler, Dodge or Fiat dealership on the credit card, card holders receive a 5% rebate.
The DrivePlus Mastercard offers 2% back on gas and travel purchases and 1% back everywhere else.
Things to consider before changing cards
But yet you have to ask: Will being a card holder mean that you’d no longer comparison shop when it comes to getting new tires or taking on a major auto repair? Will you simply go the the FCA dealer?
With any credit card, you must consider the interest rate being charged to you, as well.
The average gas-station branded credit card, for example, has an interest rate of 23.61% — nearly 7 percentage points higher than the national average for all credit cards. And many times, rewards cannot match up to a typical general-purpose credit card, according to a CreditCards.com analysis of 28 widely-available gas cards.
A point to consider: The average per-gallon discount on gas with such cards is 5 cents a gallon, according to CreditCards.com.
If you’re paying $2.66 a gallon, you’re looking at a 2% return. It’s even less on a percentage basis, as the price of gas goes up.
CreditCards.com notes that there are many general purpose credit cards that offer 2% rebates in the form of cash-back and travel rewards. And the interest rates on many of these cards can be lower.
If you are opening a new credit card, make sure to check out the various offers. Banks, for example, can offer better upfront rewards to customers who apply for the card online instead of going into a bank branch.
Are the rewards real?
Pay attention, too, when it comes to how rewards themselves could be distributed to you once you earn them.
The Costco Anywhere Visa card’s rewards are distributed annually, for example, in the form of a credit card reward certificate, once your February billing statement closes, and those points are redeemable through Dec. 31 of the year issued in a single transaction at any U.S. Costco warehouse, including in Puerto Rico, for merchandise or cash back.
Again, think about how you spend your money. Look at your past credit card statements to figure out if you tend to charge more on groceries or gas or even eating out.
“Tiered cards can look very attractive, say 3% on restaurants, but if you don’t eat out much, you won’t be earning that much,” said Bill Hardekopf, CEO of LowCards.com.
In general, he said, you should only apply for a rewards card if you pay off your balance each and every month on time.
“Rewards cards usually have a slightly higher annual percentage rate, and it won’t do you any good to rack up rewards if you are carrying a balance. You’ll end up paying more in interest,” Hardekopf said.
Matt Schulz, senior industry analyst for CreditCards.com, said plenty of credit cards offer generous bonus points or rewards to tempt consumers to sign up for the card. But you must evaluate how quickly you’d build reward points with any given card, considering how you spend money.
“The closer a card fits with your already established spending tendencies, the more likely it is to be the right fit for you,” he said.
Also consider how you’d like to cash in on those rewards points.
“Are you trying to get points for a dream vacation? Are you building credit from scratch or just chasing rewards?” Schulz said.
Contact Susan Tompor: firstname.lastname@example.org or 313-222-8876. Follow Susan on Twitter @Tompor
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