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Expert warns of reward card pitfalls

Expert warns of reward card pitfalls

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Date Published : Tuesday, March 11, 2008

There is no such thing as a "free lunch" in the credit card market, with customers best off shopping around for the best deal before settling on their chosen card, an expert has claimed.

When looking for the best credit card reward schemes on the market, it is important to look at all the cards - over 200 of them - which offer incentives and then compare which is right for your personal needs, Paul Clitheroe stated.

Writing in the Sunshine Coast Daily, the chairman of the Financial Literacy Foundation and chief commentator for Money Magazine said that while some credit cards are a "bargain", others make consumers work too hard for their rewards.

Mr Clitheroe said: "Depending on the type of card, you may need to rack up anywhere between $8,000 and $36,000 in annual card spending just to be rewarded with a $100 shopping voucher. In some cases this barely covers the annual card fee."

Most credit card loyalty schemes work by giving consumers 'points' for each dollar they spend on their credit card and which can then be redeemed for travel and accommodation, gifts, electronic equipment and just about any other product or service possible.

Each scheme has a set number of 'points' that must be attained before consumers can take advantage of redeeming. Each scheme also has a set timeframe on points - hence they will expire after a certain period if they are not redeemed.

Some credit card providers are "generous" with their rewards, Mr Clitheroe noted, so consumers should compare credit cards before signing on the dotted line.

Compare your current credit card rates with Australia's top providers.ADNFCR-1411-ID-18504679-ADNFCR

 

 

 

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