Time to read : 4 Minutes
If you’ve ever gone on the hunt for a new credit card, you’ve no doubt seen a wide range of offerings to try and encourage you to sign up. These are known as ‘sweeteners’ and are used by credit card companies and banks to attract new customers and retain existing ones.
Some of these sweeteners are genuinely beneficial and offer real value to the cardholder, but others come with strings attached or hidden costs.
So while it might be enticing to pick the card with the best sweeteners on paper, you may end up with a sour taste in your mouth if you don’t read the fine print.
What are some good credit card sweeteners?
Depending on what you’re planning to use your credit card for, there are a wide range of good features and benefits that can really help you save money or get additional value from your credit card.
Cashback rewards: these differ across different cards, but essentially a percentage or dollar value of your spending will be returned to you. This can take the form of a sign up bonus, or one off payment when you join and begin using your card, or a percentage of every transaction for certain categories and purchases. People who pay their card off each month can enjoy the benefits without accruing any interest.
Travel rewards: a common credit card sweetener due to many banks and providers having partnerships with airlines or hotel companies. These rewards can include specific deals, such as discounts on flights or hotels, travel insurance, airline lounge access and of course, frequent flyer points. Many credit cards have significant points bonuses for new sign ups.
No foreign transaction fees: another great feature for travellers, some cards offer no foreign transaction fees. Combined with the added security benefits of shopping with a credit card, this makes them great to use for international travel or online shopping. 0% interest offers: this is an offer you might also see for loans or financing on large purchases. 0% interest offers usually extend for a certain period from sign up and allow you to use the card without the provider charging any interest over the introductory period. 0% interest offers are a good feature if you’re looking to consolidate debt or make a large purchase and plan to pay it off within the offer period.
Credit card providers are always trying to attract new holders and it’s an incredibly saturated market, so there are always a wide range of sign up bonuses on offer. The problem comes after the initial period when caveats and fees hidden in the small print come into play.
Here’s what to look for when comparing credit cards
The key thing to be aware of is the annual fees associated with your card. No matter how enticing the benefits are, if you’re paying for them in annual fees, the value isn’t there. Pay particular attention to whether the fees increase after the introductory period if you’re signing up to a new card.
Another common 'watch out' is spending requirements. Many cards will have dollar values associated with the rewards they offer. This means if you’re not using your card enough, you won’t be eligible for some rewards, or you may be hit with higher fees or interest.
If you’re signing up for your first credit card, make sure you think about how you’ll be using it to ensure you’ll be eligible for the benefits that suit you.
Reward structures can also change over time, so while a card might offer big points bonuses now, over time this could reduce.
Reward programs can change or end, and if you’ve been with a provider for a while it’s a good idea to keep an eye on their current offerings and check if you can get a better deal somewhere else. Specific rewards can also have blackout dates for redemption or be limited offers.
Be aware: cards with multiple reward offerings often have higher annual fees than other types of cards. Before you sign up for a card, ensure the rewards are worth the extra you’re spending.
Bottom line
There are a huge number of credit card providers and several different types of credit cards with different sweeteners on offer, so it’s important to do your research before you sign up.
While the perks and benefits may look great on paper, if you’re paying high fees, or the reward program changes before you can benefit from it, another card may be better for you.
Likewise, some credit card sweeteners will work better depending on your lifestyle. If you’re feeling overwhelmed, take a look at Compare Club’s easy to use credit card comparison page. Check out the options and weigh up how they’ll work best for you.
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Financial Disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
