Reward credit cards not all they’re cracked up to be

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Reward credit cards not all they’re cracked up to be
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Don’t throw out all those credit card solicitations that show up in your mailbox. There’s a new angle on them that could work for your wallet.

We’re getting ready to enter the era of the plain vanilla credit card. That’s because the offers for reward cards that you’re used to promise big things, but they don’t really deliver value for the money. There are a lot of snakes in the grass in this field.

So that has led to new line of products that are just as simple as can be. They have plain terms and conditions, simple interest rates and no junk fees. That means no annual fees, no late payment fees, nothing. Barclays has one such offer at this time. It’s a flat 8% with no gotchas, gimmicks or fees.

If you run a balance on credit cards, then a plain vanilla style card is better than a reward card because you’re more concerned with having the lowest interest rate you can.

The gimmicks for rewards cards only work if you pay your bill in full each month and the offers that are promised work for you.

I recently shared a story with you about a reporter who tried to book a ticket using frequent flier miles to all these places in the U.S. and he couldn’t find a seat as promised at the promoted redemption level. He could only get seats for double or triple the points. That makes frequent flier miles like fool’s gold.

Update on Fidelity’s family of 2% cash-back credit cards

Speaking of which, I received a complaint call from a listener who heard me talk about Fidelity’s family of 2% cash-back credit cards. Again, I’ve praised these cards because they give you the 2% with no games and no gimmicks.

But here’s one disclaimer. The Fidelity Investment Rewards Visa Signature Card is issued through FIA Card Services, which is owned by Bank of America. On this particular card, FIA is not reporting a credit limit. Not reporting a limit can either nick or devastate your credit score considering that how much available credit you use makes up 30% of your credit score.

My team couldn’t get a clear answer from FIA as to why they’re not reporting a credit limit. So that means I want to advise you to avoid The Fidelity Investment Rewards Visa Signature Card specifically. If you already have one, don’t close it out because that will hurt your credit score too. Just stop using it, except for once or twice a year.

Meanwhile, any of the various Fidelity Rewards American Express Cards are still a great option for earning 2% cash-back, with truly no games and no gimmicks.

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Clark Howard About the author:
Clark Howard is a consumer expert whose goal is to help you keep more of the money you make. His national radio show and website show you ways to put more money in your pocket, with advice you can trust. More about Clark
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