The 4 Different Types of Credit Card Deals

Posted on Tuesday, 22nd June 2010 by Timothy Bell

This is a guest post from Mr. Credit Card, who reviews credit cards and provides updates and opinions on the latest credit card and financial developments. Follow him on Twitter.

In any business, products are always marketed with deals to encourage new customers to sign up. Once they have signed up, companies would hope that the new customers find the products compelling enough to stick with it.

However, with almost every company marketing that way, we as consumers are bombarded with so many messages that sometimes, we do not know if we should take the bait. Today, we will look at some common teaser deals that credit card issuers engage in and I will highlight the things you have to ask yourself before biting the bate.

0% Teaser Rates

0% APR credit cards became really common a few years ago. There are two types of 0% deals. The first type is where credit card issuers offer a 0% rate for purchases up to a specific period. For example, you could get a 0% deal for 6 months or 12 months. That means that if you make a purchase, your balance will not incur any interest or finance charges for that period. You still have to pay your minimum payment (which could range from 2% to 4%).

The other type of 0% teaser deals is for balance transfers. That means if you move your balance from an existing credit card to a new card that offers a 0% APR balance transfer deal, you will get a 0% rate for (again) a specified period. This gives consumers who are not happy with their existing card a chance to move their balance over and save money on interest at the same time.

The right way to take advantage of these deals – These type of 0% teaser deals are best taken advantage if you have a purpose in mind.

For example:

you may want to make a large purchase and spread out your payments over time – just make sure you have already saved up for the purchase and not get into debt

you have credit card debt and are looking to pay if off quickly and the 0% interest will help reduce your interest cost

Sign Up Airline Miles

This is the favorite tactic of airline rewards credit cards. Very often, the sign-up bonuses are pretty generous and in many cases, enough to get a free domestic return coach ticket (based on most frequent flier program miles requirement). While these are great incentives, there are also smart ways of going about accumulating miles from credit cards.

Figure out how much many miles you need for your next flight

Apply for both consumer and business version of the card

Churning cards if you can get away with it this is an advanced technique. It should be only done if you are not bothered about your credit score (ie you already have your mortgage and auto loan signed and sealed). But some issuers let you apply for a card, get the bonus miles and then cancel it. And after a period of time, you could reapply for another version of the card (like gold, platinum for eg). When you do this, you could earn a lot of bonus miles.

One time Cash Back Bonus

Many credit cards that give cash rewards entice new sign ups by giving away a one-time cash bonus. They would normally require you to spend some money on within the first three months before they give it to you.

Signing up for these cash back deals require a little more thought. For bonus miles, there is a clear purpose in your mind get miles to exchange for free tickets in the future. But for cash back bonus, I would suggest checking the rebate formula before applying for such cards. Most folks (assuming you pay your bills fully) should be using cash rebate cards to earn rebates.

Hence, making sure you have the right card is more important than simply applying for a card just for the rebates.

Lucky Draw Sign Ups

Occasionally, credit card issuers will give out lucky draws as an incentive to sign up for their cards. For example, Discover is now giving away a few gift cards every month. You are eligible for a draw as long as you use your card. At the end of this year, they will conduct a draw and a lucky person stands to win a cool $1 million.

Though this is tempting, you have to remember that like any lottery draw, your chances are pretty slim.

Only get their card if it suits you spending purposes and you can earn more rewards. Do not apply for it simply because you stand a chance on a jackpot.

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