While credit cards have encountered considerable negative publicity recently with reports of accounts being closed and credit limits be reduced,  there are still some worthwhile incentives being offered, and for those with good credit ratings who repay their entire balances each month, they are worth considering.

David Black, Principal Consultant - Banking at Defaqto said: “There are a variety of reward based credit card schemes and these include points schemes, air miles and cashbacks. Some of them can be very difficult to compare and, certainly in the case of cashbacks, it’s worth reviewing what’s available on a regular basis, as the best offers often gain that position by virtue of a short-term introductory enhanced rate.

“It’s possible to use different cards for different types of spend to take advantage of the enhanced returns marketed by some credit cards. For motorists, the Shell card is currently a clear market leader.

“If you are unlikely to repay the entire balance every month you should concentrate on the interest charged rather than the rewards offered.” (more…)

In recent times the credit card industry has done little to encourage customer loyalty, preferring instead to pursue new customers with a wide range of enticing introductory deals, such as 0% balance transfers, 0% purchase or enhanced introductory cash backs.Meanwhile, existing customers were largely ignored and, unsurprisingly, the credit worthy ones decided to take advantage of these deals and switched cards on a fairly regular basis.

Against this backdrop Capital One has announced an initiative which is a genuine attempt to engender loyalty within its current customer base, as well as an initiative designed to win new customers.

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Consumers are being rewarded for disloyalty by credit card companies restricting best offers to new customers, says Defaqto’s in its latest report “Credit Cards in the UK”.

Despite the introduction of some ‘anniversary’ offers for existing customers, such as those offered by the Egg Card and the Post Office’s Two in One Credit Card, consumers are still able to get better deals by switching to a new card.

The average duration for an introductory 0% offer lasts 9.5 months for balance transfers and 5.6 months for purchases, whereas existing customer 0% anniversary offers are typically 5 or 6 months for balance transfers, so it is not difficult to see that consumers can be better off by applying for a new card.

David Black , Principal Consultant Banking, and author of the report, says: “There is a clear incentive for the creditworthy to review and change their credit card on a regular basis. The credit card industry is geared to routinely rewarding customer disloyalty for the creditworthy and there seems to be little evidence of this changing.”

Some market leading credit cards are offering 15 months 0% interest free credit: Virgin’s Credit Card for balance transfers and Halifax’s Purchase Card for purchases.

Cash back credit cards tell pretty much the same story, with the best ones invariably limited to an introductory period. Cash back rates of 6% (Shell MasterCard from Citi: on Shell fuel purchases for 3 months but paid as a discount on future fuel purchases), 5% (Amex Platinum: on spend up to £4,000 in the first three months; and Abbey Credit Card: on £1,000 of supermarket spend before 31 st January 2008), and 4% (Capital One Cash Back with World: for first three months) are some of the best available.

Black adds: “One area where credit card loyalty can be engendered is a rich reward scheme partnership with a national retailer or service provider whereby discounts are earned towards future high value purchases.”

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