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Using credit card debt may lead to rewards from lenders
By Sam Craine on Mar 18th, 2010
As may be expected, many companies that issue credit cards are trying to enact new policies in order to cope with rule changes from Washington.
At the end of February, new regulations from the Credit Card Accountability, Responsibility and Disclosure Act took hold. The new rules limit companies from increasing interest rates, which could make it more difficult for creditors regarding profits.
As a result, some companies have introduced new fees for accounts to make up the difference, including an annual charge for having an account. USA Today columnist Sandra Block wrote recently that there are ways for consumers to still get the best out of their credit card debt accounts despite changes in fees.
Block said companies can still generate profits off their customers through interchange fees, which card issuers charge merchants. Every swipe of a credit card brings in revenue from merchants, even if consumers pay their balances in full, thereby avoiding interest payments.
"To cope with an expected loss of interest income, credit card issuers are looking at ways to reward customers who frequently use their credit cards - and get rid of those who don't," Block wrote.
Consumers should also weigh whether keeping a particular credit card debt account is worth the fees involved. Rewards offered through the card may be one way for account holders to make that determination.
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