Credit Cards

How Are Credit Card Lenders Trying to Lure New Borrowers?

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More credit card lenders are offering greater rewards programs in hopes of enticing more consumers into opening new accounts, according to a report from Scripps Howard News Service. This is likely because a large number of new federal regulations have substantially cut into lender revenues.

However, these accounts are typically carrying offers for significant rewards bonuses when consumers spend more than a certain amount within the first three or six months they have the new card, the report said. And while the spending threshold is typically high, some consumers may find the bonus worth it even if they don’t have any plans to use the card regularly in the future.

“It is getting to the point where, in some cases, the incentive is so attractive that consumers may as well apply for a card to cash in on its incentive, regardless of whether they have any serious intent to use the card in the long term,” said Andrew Davidson, senior vice president for research firm Mintel Comperemedia.

In addition, some experts believe that the value of these offers will only increase in the future, according to U.S. News and World Report. Greater competition between lenders for a shrinking pool of borrowers will likely cause the value of these incentives to grow. However, some warn these cards also carry greater danger for consumers because they typically come with large annual fees and higher interest rates that can be difficult to afford.

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