Different Credit Card Features

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Not surprisingly, credit cards are big, big business, and there are many credit cards on offer from many different suppliers. As such, there is no end to the so-called incentives to tempt you to use one card over another but, quite often, the devil is in the detail so don't be fooled by gimmicks or touchy-feely credit card offers. Look carefully at the terms and conditions for every credit card that you consider..

Some of the more popular selling points of credit cards are:

Air miles

The thought of accumulating air miles every time you make a purchase with your credit card can be very appealing. Exotic journeys to far off places, and each time you use your card to fill your car up, or buy the weekly shopping, you’re inching your way there. It’s the concept of ‘free travel’ that makes these cards so appealing, but the devil is in the detail. Credit cards that come with rewards typically have a higher rate of interest or higher annual fees. While this isn’t always the case, it pays to do the math before signing up for such a card, particularly if you don’t think you’ll be able to pay your outstanding amount off each month. Punitive charges such as late fees and the interest charges could well add up to more each year than the cost of the travel you’ll eventually receive if you use your card regularly. Typically speaking, you’ll receive one air mile (or thereabouts) for each dollar/pound/euro you spend, and you’ll generally have to accumulate thousands of ‘miles’ to qualify for an award (therefore spending a lot of money in the process). You can normally earn bonus miles by shopping at particular outlets, or when special deals are announced. There are two types of air mile cards: those that earn points independent of any particular airline and can be used as such for travel with many different carriers, or those that are tied specifically into a carriers existing frequent flyer program. If you do decide to sign up for a credit card that offers air miles as a bonus, you should check carefully any limitations and conditions for cashing in those air mile points at a later date.

Low interest

Low interest credit cards are best suited to people who are more likely to not pay the outstanding amount on time each month and therefore will attract interest on their purchases. Low interest cards tend not to offer too much in the way of rewards, such as points or air miles, but they do ease the pain somewhat (compared to their higher interest counterparts) if you need to extend your credit and pay those bills off over a period of time. As with any credit card, keep an eye out for the extra charges, such as an annual fee, and any possible admin or monthly charges that are added to the bill. Sometimes a low interest rate is not all it’s made out to be by the time you factor in the extra charges. With the growing competition between card issuers for your business, the specialty niche of low interest cards is becoming less defined as mainstream cards move more and more into that territory.

Cash back

As far as rewards go, cash back credit card incentives are far simpler to understand and take advantage of than, say, air mile points. Put simply, the credit card issuer will rebate the amount of any purchases that you make by a certain percentage (for example, 0.5%). This means that the more you use your card, the more money you’ll get back from the card issuer. Obviously this seems like an attractive offer and it certainly can be so, providing you don’t carry a balance at the end of each month. If you don’t pay off your limit each month you can be sure that the amount of interest you’ll get charged in punitive fees will eat into your rebates quite rapidly. If you’re good at managing your finances each month and can comfortably pay off your outstanding balance, then a cash back credit card can be a good option to discount your weekly or monthly purchases. As with all credit cards however, be careful to read the small print and take care to be aware of any annual fees or other admin charges in the contract.

Other incentives

The range of gimmicks and promotional incentives that credit card issuers will use to try to tempt you will be as varied as the cards themselves. Will all offers, make sure you read the small print and understand fully the terms and conditions of the contract before signing up, and as always, pay particular attention to the credit card's APR, annual fees, and any other contracted charges that are applied.