These days, many of the nation’s top credit card lenders are trying to find more borrowers to take on their accounts. However, while many are expanding their efforts to market to subprime borrowers, they would still prefer those whose ratings are high.
Many consumers across the country with high credit ratings and a history of spending on their existing accounts may now be receiving a greater number of credit card offers for accounts with greater perks. Lenders are extending these newer, more generous accounts in an effort to entice high-quality borrowers into opening new cards that can be serious money-makers for the issuers.
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The cards targeted specifically to high-quality borrowers are generally those with extremely low interest rates and top-notch rewards offerings, and are typically not available to most other borrowers. These rewards programs, in particular, can be extremely beneficial to wise borrowers, who keep their balances down and spend a large amount every month.
While this may not be easy for most consumers to afford, the benefits those who receive these offers can rack up are often extremely generous and come with more significant cash back, points or miles than the average user might be able to earn. Of course, because of the large amount of money being spent on such an account, it can also be easy for a borrower to carry a balance over from one month to the next, and therefore incur interest charges that can often be significant.
These cards also usually have high credit limits and might even stipulate that consumers spend a certain amount every month or year to ensure that they are making money from the proposition. Such an account may also come with a sizable annual fee, which can eat into the value of the rewards benefits earned over the course of a year.
For those who have high credit ratings and a tendency to spend on their cards, it can be extremely helpful to do some math before agreeing to a new account, and determine exactly how much the account will both earn and cost over the course of a year. Given current spending and repayment habits, it may be easy to determine the overall value such an account will have over its lifetime.
Image: Don Nunn, via Flickr