Everybody thinks Sherlock Holmes has superhuman intelligence, but that is not exactly the case. What he has is an amazing level of attention to detail. (That, and his whole “mind palace” thing.) Point is, we can all avoid being victims of unsavory deals and other similar credit card gimmicks by paying attention to all details involving our credit cards.
Credit card companies are striving to gain more members every day, and in order to attract more people to sign up, they go to great lengths to make every membership offer attractive. This means tempting deals and hard-to-resist rewards systems that make people think they are actually getting more. However, a good deal can turn really sour unless you pay attention to important details. There are always things indicated in the fine print that might make you reconsider signing up for the card if you only ever took the time to read it. Here are some deals you should pay attention to:
Confusing Rewards Program
Sometimes, we tend to focus on the actual reward before we realise that the program itself is way too complicated not just to understand but to also enjoy and take full advantage of. One common example of this would be rotating rewards programs. Rotating rewards programs—one of the many kinds of credit card rewards gimmicks that exist out there—is when the credit card issuer switches up which kinds of purchases qualify for rewards in specific periods of time, and you have to sign up for them every quarter. For example, this quarter, you may get discounts on certain shops. Next quarter, you get cashbacks from gas purchases. The kicker here is the requirement to sign up. Many people tend to forget to sign up, so they end up using the card more frequently than they normally do for absolutely nothing.
Some card issuers provide really complicated rewards redemption systems. Like when they offer discounts, there is usually a ton of terms and conditions by which credit card users need to abide before they can be eligible for the savings. However, complicated rewards systems—like needing to purchase a specific amount at participating establishments for a certain number of times—make it harder for cardholders to avail of the discounts anyway. Most cardholders would rather consign the whole thing to oblivion because the many terms and conditions make claiming the reward points inconvenient. Sometimes, complications can lie in the usual reward points the banks offer. A lot of people are misled by how many reward points they can actually get per transaction.
One can argue that such complications exist simply to get new cardholders to sign up, and yet dissuade them from collecting rewards. Whichever is the case, if you do not pay attention to every single detail your credit card issuer provides you with regarding the rewards program supposedly ideally created for you, then it is very likely that you might end up allowing your points to go to waste.
These promos usually have attractive headlines like “Get 50,000 rewards points!” accompanied by pictures of the prizes for which you can redeem your reward points, which sounds great, so you sign up. Then you notice the tiny asterisk next to the headline. Apparently, you only get those points after spending a specific amount of money using the card first.
These types of programs that have spending thresholds before you can claim your reward often leads to you overspending just to get said rewards—the very reason you signed up for the card in the first place. The end result? The bank ends up with a new cardholder and makes money while you fail to get your frequent flyer miles or cashback points. What you do get is some credit card debt that you would not have had in the first place had you read the fine print.
One of the more annoying ways of setting up a rewards program is by putting a cap or a ceiling on the amount of rewards you will get. A lot of credit card companies have these types of rewards programs which have a limitation on their rewards. A lot of people tend to be shocked when they feel they are entitled to more rewards then find out that they can only qualify for less than what was expected.
These caps are described clearly in fine print. While one cannot blame the credit card issuers to take measures in ensuring that such a privilege is not abused, it would be better if these terms are featured more prominently when promoting the programs. But since that is not exactly standard practice in matters of this sort, it might be best if potential credit card users go and read those terms and conditions.
How to Combat Confusion
With confusing credit card rewards programs taking a significant chunk out of your finances, it might be wise, as mentioned several times in this post, to read the fine print. Do not just read it, but understand the terms and conditions—the same way Sherlock Holmes analyses each and every single detail of any case he works on. Absorb the details. Do you understand the terms or are the conditions a mystery to you? Are there details you do not fully understand?
Ask questions and do the necessary research if there are aspects of these programs that confuse you. It is important that you take into consideration the fact that signing up for anything you do not completely understand might lead your financial standing to suffer. Information is the most important tool you can have, and it is always best to equip yourself with that tool properly.
Another way to avoid the promotional pitfalls that at times come with credit cards is by preferring simpler programs. There are some credit cards out there that have straightforward terms that would not have you digging through tons of fine print just to know exactly what you are getting into. Banks that provide direct terms and conditions and uncomplicated means to provide rewards for their card users would keep you from getting into financial trouble as you have a clearer understanding of how that particular credit card works.
Lastly, the best way to avoid the negative effects of confusing promotions is by simply knowing yourself better. Rewards systems should work for you, not the other way around. Understand your spending habits and look for promotions that would benefit from those spending habits. For example, if you drive around a lot, then the whole gas cashback thing would work for you. Find a promo that would fit in with your natural spending habits instead of altering your habits in order to get these rewards. After that, you enjoying whatever credit card rewards issuers offer would purely be elementary.