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One reason many people dislike credit cards is that often, they impose harsh interest rates and fees when cardholders carry debt or miss payments. For example, most cards charge a late payment fee equal to the minimum payment or $25, whichever is less, and up to $35 for subsequent late payments. In addition, cardholders who pay late lose their grace period and have to pay interest charges on all of their purchases.
Thankfully, there are some rewards cards with incentives that encourage customers to use their credit cards responsibly, and at least one that has simply eliminated fees altogether.
Citi recently introduced a new card that rewards cardholders as they pay off their debts. The Double Cash rewards card offers 1% cash back on all purchases, plus another 1% cash back as cardholders pay off their bill. So the sooner they make a payment, the sooner they receive their cash back.
According to Chris Fred, head of rewards product management at Citi Cards, “By earning an additional 1% cash back when their purchases are paid off, we hope customers will have a sense of accomplishment and an added incentive to pay down their balances quickly.” In fact, Fred anticipates this card will appeal to a broad cross-section of Citi’s customer base, not just the narrow segment focused on earning cash-back rewards.
Further, this card will automatically waive a customer’s first late fee, removing a significant penalty that cardholders face when they make a mistake with their payments. And unlike many other cash-back cards, there is no enrollment required, no spending categories to keep track of, and no cap on the amount of rewards that can be earned.
Citi cards also come with the Price Rewind service, which now covers purchases made within the past 60 days, up from 30, and up to $300 an item, up from $200. According to Citi, Price Rewind refunded customers an average of $85 on eligible purchases throughout 2013.
Capital One offers its Journey Student Rewards card with built-in incentives for young adults to get in the habit of paying their bills on time. Cardholders receive 1% cash back on all purchases, plus an additional 25% cash back each month that they pay their bills on time.
As a student credit card, Journey is available to those with average credit, which includes students with a limited credit history. Nevertheless, this card includes valuable benefits such as an extended warranty program, auto rental insurance and travel accident insurance. There is no annual fee for this card and no foreign transaction fees imposed on charges processed outside of the United States.
3. PenFed Promise Visa
This card falls more into the category of a credit card that won’t punish you for being irresponsible, but we included it since it’s a card responsible cardholders are likely to find appealing. The Pentagon Federal Credit Union, or PenFed, offers members its Promise card that boasts no fees for anything. This includes no annual fee, late fee, balance transfer fee, foreign transaction fee, or even a penalty APR. So in essence, this card has removed all of the penalties for making late payments, other than the simple fact that interest will continue to accrue on cardholder’s balances.
Of course, those who consistently fail to make payments will find their accounts suspended or closed, and their payment history reported to consumer credit bureaus, which makes it optimal for cardholders who just slip up once in a while. Sill, cardholders with an imperfect payment history will be able to avoid all of the other punitive fees imposed by most cards.
Applicants must first become a member the credit union, which is available to a broad cross section of those who are active or retired members of the military and many other organizations, including the family and household of existing members. Others can join a military support group for a nominal one-time fee that qualifies them for credit union membership.
Only credit cardholders with the best credit scores get access to the best credit cards, and in that way, almost all credit cards reward responsible users. If you want to see where your credit stands, you can check two of your credit scores for free once a month on Credit.com.
At publishing time, the Journey Student Rewards card and PenFed Promise Visa are offered through Credit.com product pages, and Credit.com may be compensated if our users apply and ultimately sign up for these cards. However, this relationship does not result in any preferential editorial treatment.
Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.
More on Credit Cards:
- How to Lower Your Credit Card Interest Rates
- 6 Smart Credit Card Strategies
- How to Get a Credit Card With Bad Credit