March 30, 2006

By Peter Kenny

Reward are becoming very popular. Most people will have noticed that the prices and interest rates that are being charged by credit card providers have dropped significantly in recent years. This is all due to the heightened level of competition that credit card providers are engaging in to attract more and more customers to their products. However, there is an important group of customers who may not be overly attracted to simply on the ground of lower interest rate charges.

This group of customers will be one of the most important customer groups on the market since they will represent a wealthy and generally high spending and high earning group. They are also the customers that pay off their entire credit card balance in full every month. For these customers, they will not incur any interest charges each month as they have cleared their balance and therefore, having lower and lower interest rates will make very little difference to them. They will still be important customers as they are unlikely to default on their debt and every time they make a purchase the credit card company will receive a fee from the seller.

The way credit card companies have come up with attracting these consumers is to provide them with rewards for the money they spend on their credit card.

One of the most popular of these reward schemes has been the air mile or travel rewards cards. These will offer their customers airmiles or rewards for every pound they spend on the credit card. Not only does this offer the customers a feature that will be relevant to them, but also encourages them to spend more on their credit card even when it is not necessary because they will be accumulating rewards.

Airmile will vary greatly from company to company. There will be two main points that you will be most interested in with your airmile credit card. The first is the rate at which airmiles will accumulate. This may be one mile per pound spent or as high as four miles or more for every pound you spend. As well as this, you will be interested in the type of airmiles that are offered. If they are for an obscure airline that you have never heard of then they will not be as attractive to you as if they are for British Airways or another major airline, and all their affiliated airlines.

Here are some popular with travel rewards:

Morgan Stanley Buy & Fly! - earn one point for every £10 you spend
Co-operative Bank Travel Card - Earn 1 travel reward point for every £1 you spend
British Airways - Earn up to 1.5 BA miles for every £1 you spend