Credit cards are being used to lure in customers

creditCREDIT card rewards schemes are about to take a turn for the worse, resulting in many lenders wheeling out bonuses to get new customers to sign up.

Annual fee waivers, tens of thousands of Frequent Flyer points, shopping vouchers and discounted interest rates are among the tempting deals lenders are trying to attract spenders to agree to taking out a new credit card.

From July 1 customers will have a tougher task at trying to rack up rewards points as lenders cut back on their offers and scale back how much spending can earn consumers value.

They will also limit the amount of points that can be accumulated.

The strict interchange fee regulations that kick in from next month — the fee is how much they can sting customers who pay by plastic — will means less revenue for lenders and in turn less rewards for customers.

RateCity spokeswoman Sally Tindall said the ever-changing rewards cards landscape would make it tougher for consumers to reap any benefits from their cards.

“A lot of lenders are taking the opportunity to put on extra offers to get your business, but sometimes these can be extremely attractive, but when you crunch the numbers you could pay more in the long term for having that card,’’ she said.

“Customers should look at their spending habits, but if you are someone who spends a lot on your credit card and pays it off in full every single month then a rewards card could be good for you.”

 Ms Tindall warned consumers to look closely at the card’s annual fees.

Many can be hundreds of dollars a year and this could override any gain made by signing up to these deals.

But for those consumers who can’t pay their card off in full each month, Ms Tindall suggested looking at a card without inducements, instead with a low annual fee and low interest rate.

“All our Gold, platinum and diamond customers can activate travel insurance online.

“Benefits include unlimited overseas emergency medical assistance and hospital expenses, cancellation cover, cover for lost luggage and personal belongings.”

The average credit card interest rate is about 17 per cent, which will sting customers hard if they fail to wipe their card debt each month.

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