Released: June 04, 2006

Credit card gimmicks galore

Source: By Binyamin Appelbaum, Charlotte Observer

It’s not your imagination. There are more offers from credit card companies in your mailbox.

The industry is desperately seeking new customers in a nation where everyone already seems to have several credit cards. Last year, companies mailed out 6.06 billion solicitations, a record. Also a record: Only about 18 million offers, or about 0.3 percent, were accepted.

Recognizing the need for better bait, companies are sweetening more of their offers with the promise of rebates or rewards. Spend something, get something back.

There is a card that pays down your mortgage. A card that rebates 5 percent of the money you spend on gas. And a card introduced last year that combines gambling with credit card use. Each dollar charged to the American DreamCard earns a ticket in a monthly lottery. Spend $1,000, get 1,000 tickets. The jackpot climbs from $25,000, depending on how many people pay to play.

For consumers, the trend is a chance to pursue rewards of almost any flavor. It’s also an enticement to spend more than you’d planned. “If you have a high bill that you can’t repay at the end of the month, the whole point of earning a 5 percent reward gets eaten in two seconds by the 18 percent interest rate,” said Linda Sherry of Consumer Action, a nonprofit group that tracks the credit card industry.

Read Full Article: Credit card gimmicks galore