http://www.canada.com/story.html?id=795502&p=2
Summary
Many credit cards are offering travel reward points as one of their many perks. When selecting a credit card, its not only about the interest rates and affiliations, but rather the rewards that come with using that card. Travel rewards are one of the most popular ones out there for credit card holders. For each dollar spent, the Royal Bank Avion Platinum Visa Card gives one reward point. BMO Bank of Montreal’s Mosaik Gold Air Miles rewards program is being re-launched. Not only can card holders redeem more flights using less reward miles but the interest rates are slightly lower than most of the other cards. Scotia Gold Passport Visa’s best selling point is their flexibility. They ensure that “you can book flights on any airline, to any destination, at any time of the year, without blackout periods, limited seating or Saturday night stay restrictions”. Most of the credit cards that have travel reward programs charge cardholders an annual fee of usually $90 - $120. Some credit cards require a minimum annual income frequently $25,000 to $35,000 and most often give bonus points when you sign up.
Connection
This article connects well with what we’ve been learning in chapter 14 about how banks are involved in businesses and how a bank is actually a business of its own. One of the many revenues that enter a bank are the credit cards that they have associated themselves with. By offering their clients credit cards, they can charge interest fess, annual fees, and so on. But to attract consumers to get their bank’s credit card, they must offer perks to pull them into wanting to have that credit card. Different credit cards are trying different methods to draw in consumers so they can make more revenue. Even though credit cards are most often used at the time of purchase and swiped through a machine, I’ve heard that some credit cards also provide cheques, which could be very handy. By allowing cardholders to have larger amounts in their transactions, the bank benefits from this largely. If the cardholder fails to make their full payment, the bank is entitled to charge interest on the amount owing and continue piling on interest until the full amount is cleared. Credit card agencies bank on this deficiency of the clients in order to make prodits, as they charge high interest rates for delayed payments.
Reflection
Even though I am not of age to have a credit card, I know which credit card I would like to have when I can get one. The reason why my father uses the credit card from President’s Choice because they offer reward points and once you reach a certain amount you can use those points and get something that will make you believe it’s worth it to be using a credit card from that company. Because my dad is a man like any other father and guys tend to be lazy, he likes to do his shopping all at one store. So when he heard about the credit card that is affiliated with SuperStore, he knew he had to get one. Once he collects a certain sum of 20,000 points I believe he can get $20 worth of grocery from SuperStore free of charge. This method that SuperStore uses works extremely well because they carry almost everything, which allows customers to easily accumulate points, thereby successfully luring them into the program.
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3 comments:
Even before the current economic downturn, credit cards often had incentives plans like travel reward points. Nowadays there are also credit cards that are affiliated with companies like Starbucks. With the need to stimulate the economy by having consumers spend more, it'd be no surprise if more incentives were introduced. Before reading your blog, I had never thought that a "bank is actually a business of its own". In reality, banks do rake in quite a bit from credit cards since there are numerous monthly fees and no longer is it uncommon to have more than one card. I guess with so many perks attached to "plastic" it seems pretty harmless to have more than one, until the monthly bill comes in the mail.
-M.Wong (Block B)
I feel the same way about the Superstore Presidents Choice credit card. My story is similar to yours, but instead of my dad it’s my mom. My mom only uses her credit card when she buys groceries all in one go or various luxury items, any other time she uses cash. Even though my dad is aware of credit cards, he prefers cash purchase because he know how much he spends instead of waiting for the bill to come. Unlike my dad I’m excited about getting my first credit card. Credit cards are very useful when people don’t have enough cash on hand, but the one drawback I’m worried about is paying it back, with interest at the end of the month.
The thought of a credit card makes me want to get one! That's because my dad earns airmile points through using his credit card and because of airmiles, I have an urge to get a credit card. My dad got an airline ticket to Hong Kong free of charge because of the airmile points he saved up. On top of that I got a $100 gift certificate to purchase my iPod at future shop. With all these points getting saved up, people just can't stop their buyings with a credit card. A bank really is a business of its own. They think of ideas to lure customers into joining their programs, just like they're about to lure me into getting a credit card. :)
Melissa Man
Block B
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