Consumers Prefer Airline Credit Cards from Cash Back
A research conducted by the Auriemma Consulting Group shows a surprising result among credit card holders. According to this survey, the percentage of cash back credit card holders dropped down from 53% in 2005 to only 39% in 2006. On the contrary, the percentage of consumers with airline credit cards has increased from only 41% in 2005 to 48% in 2006. Based on this survey, it seems that more consumers now prefer to acquire airline credit cards than cash back credit cards.
Which do your prefer?
Which credit card do you prefer, cash back or airline credit card? Perhaps your answer would depend on your lifestyle and spending. Some people may think that a credit card with Frequent Flyer Miles Rewards will give them a bigger reward value but before you go and rush into signing up for a travel reward card, don’t forget to consider it matches your lifestyle.
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For instance, to qualify for one free travel ticket, how many points do you need to collect? Usually, a travel reward card gives 1 mile or 1 point for every 1 dollar purchase. The question is, how many miles or points do you need to collect to earn your free airline ticket?
Add to this, earning points may only be limited to airline, hotels, car rentals and other travel related purchases. If you’re not a frequent traveler, it may take a really long time before you can earn your free travel. Therefore, travel rewards are only recommended for people who frequently travel and use credit cards on their trips.
Another factor worth considering is the annual fee. Some cards charge as much as $50 to $100 for the annual fee. Imagine how much it will cost you to activate your credit card membership in five years. That could amount to $250 to $500 in 5 years. Would the annual fee offset the amount of rewards you’ve earned with your travel reward credit card?
Clearly, if you’re not a frequent traveler and you don’t really use your credit card as much, getting a cash back credit card would be a more practical choice. Why? Credit cards with cash back rewards have more flexible terms and conditions on collecting and redeeming rewards. Generally, you earn 1% cash back per dollar charged to your account. This means, each time you use your cash back credit card- regardless of the type of your purchase- you instantly earn points in your account.
Redeeming cash back bonus points is also less complicated. Some cash back cards automatically credit bonuses to the card holder’s account. Thus, the rebates you earned will be deducted from your monthly balance. Other cash back cards give customers the option to choose how they want to redeem their rewards – either through check, gift certificates or as merchandise from their online rewards shopping site.
Ultimately, whichever credit card you choose- whether a cash back card or an airline credit card- the benefits you’ll get would depend on how well you use them. If you make it a point to use your reward credit card only on important purchases and pay off your monthly balances on time, you should be able to get the most out of your reward credit card and minimize the risk of incurring uncontrolled debt.
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